Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

C-POULTRY COMPANY LIMITED BILL

ALEXANDRA PARK AND PALACE BILL

PLYMOUTH MARINE EVENTS BASE BILL

Lords amendments agreed to.

BIRMINGHAM CITY COUNCIL BILL

Read the Third time, and passed.

BRITISH RAILWAYS BILL

Order for Third Reading read.

Queen's consent on behalf of the Crown, signified.

Read the Third time, and passed.

DURHAM CITY COUNCIL BILL [Lords]

As amended, considered.

Clause 7

POWER TO CLOSE FOOTPATHS ON RIVER BANKS ON SPECIAL OCCASIONS

Amendment made: Page 5, line 42, leave out "purpose" and insert "event"—[Mr. Armstrong.]

Clause 8

AS TO FREEMEN

Amendment made: page 8, line 34, leave out 'for" and insert "or"—[Mr. Armstrong.]

To be read the Third time.

Oral Answers to Questions — ENERGY

Scottish Coalfield (Employment)

Mr. Douglas: asked the Secretary of State for Energy if he will make a further statement on the employment situation in the Scottish coalfield.

The Secretary of State for Energy (Mr. Peter Walker): The National Coal Board tells me that at 6 July it had 10,216 industrial employees in the Scottish area. This compared with 12,590 at 31 March 1985. The net fall in numbers was therefore 2,374. During that period 2,332 men accepted voluntary redundancy.
NCB (Enterprises) Ltd. is actively seeking to encourage job creation in Scotland.

Mr. Douglas: Does the Secretary of State recognise the considerable grievance about the Scottish economy and job losses? We should all be happy to record an improvement in industrial relations and output, particularly in Fife, but would that not be enhanced if the Secretary of State used positive forces to ensure that the cases of more than 200 men dismissed during the strike are reviewed by the National Coal Board? At the same time,


will the right hon. Gentleman use his good offices to ensure that good industrial relations are brought back to the Scottish coalfields?

Mr. Walker: I have already informed the hon. Gentleman that a review of all the dismissals in Scotland has taken place. I understand that the result of that review will be known shortly.

Mr. Skinner: Will the Secretary of State make absolutely clear to the House and to the nation that those employed in certain coalfields who have been treated differently from men working in other coalfields will get a fair crack of the whip, like the many Members of Parliament who have fallen foul of the law over the years but have somehow managed to retain their jobs, like his old pal Jim Slater, who cost the taxpayer £70 million——

Mr. Speaker: Order. That is a bit wide of the question on the Scottish coalfield.

Mr. Skinner: —and is now exploiting people once again?. If he can apply something to Jim Slater, he can——

Mr. Speaker: Order. That is an abuse of Question Time.

Mr. Walker: We notice the hon. Gentleman's pathetic utterances. Whenever he has a bad case, he does that. It would be appreciated if the hon. Gentleman showed a little interest in those who suffered from violence during the pit dispute.

Mr. Eadie: Is the Secretary of State aware that the Opposition welcome his statement that there will have to be some meetings concerning victimised miners in Scotland? It is an abuse of language to say that there has been a review. There has never been a review.
Is the Secretary of State aware that employment in the mining industry in Scotland will continue to contract as long as there is no investment in the area? As the right hon. Gentleman is aware, we have figures from Mr. Wheeler showing that from 1979 to the present time investment in the Scottish coalfield has been reduced. No investment means contraction of the industry.

Mr. Walker: The Government's investment record in the coal industry is much better than that of the previous Labour Government. Therefore, any comparison of investment must show that in coalfields throughout the country there has been a substantial improvement under this Government—an improvement that did not take place under the previous Labour Government. Whether the comparison is on closures, investment or anything else, this Government's record compares very favourably with that of the previous Labour Government.

Electricity Consumption (Remote Meter Reading)

Mr. Freeman: asked the Secretary of State for Energy when he last met the chairman of the Electricity Council to discuss the results of trials on the introduction of remote meter reading for electricity consumption.

The Parliamentary Under-Secretary of State for Energy (Mr. Alastair Goodlad): As the trials are still in progress, it has not been possible to discuss the results with the chairman of the Electricity Council.

Mr. Freeman: Does my hon. Friend agree that if the trials are successful, the electronic reading of the

consumption of gas, electricity and water will be facilitated? Does my hon. Friend also agree that if that can be done, there will be two advantages: first, that the house owner will be able to see, by visual display in the house, exactly what is being consumed and therefore how much is owed; and, secondly, the important principle in all utility consumption that the consumer is paying for what is consumed and therefore metered?

Mr. Goodlad: As I have said, the trials are still in progress. The indications are that the electricity cable can be successfully used for joint remote reading purposes by all three utilities. Feedback from consumers indicates that they positively welcome the information provided by the display unit.
If the present trials are successful, the next essential step will be to establish the cost-benefits of the large-scale introduction of such a system in order to justify the investment needed.

British Gas

Mr. Michael Morris: asked the Secretary of State for Energy if he proposes to include in the legislation for the privatisation of the British Gas Corporation provisions covering safety standards for the installation of gas appliances; and if he will make a statement.

The Minister of State, Department of Energy (Mr. Alick Buchanan Smith): Yes, Sir. The installation and use of appliances are already the subject of safety regulations, and my officials are discussing them with the Health and Safety Executive.

Mr. Morris: That is an encouraging answer, but there is concern outside. Is there not an analogy with the privatisation of British Airways, where pilots have maintained safety and will continue to do so? Can the public be totally reassured in the same way that, when gas is privatised, safety will be a major consideration?

Mr. Buchanan-Smith: Yes, indeed. British Gas has a very good safety record. We want to do everything in the legislation to encourage the highest possible standards.

Mr. Portillo: Will my right hon. Friend confirm that there is absolutely no reason to think that the privatisation of British Gas will involve lower safety standards? Does he agree that if allegations are made that privatisation will involve lower safety standards, they can be seen as the usual scare story that always accompanies a privatisation proposal?

Mr. Buchanan-Smith: My hon. Friend is correct. Safety is extremely important, and all those concerned are getting the fullest co-operation in the preparation of the law.

Mr. Rowlands: If British Gas is privatised, thereby creating a huge private monopoly that is not answerable to the Secretary of State or to this House, will the Minister at least give us a complete assurance that any regulatory body which governs that industry, in regard to safety, prices or other energy matters, will be of a maximum, not a minimum, character?

Mr. Buchanan-Smith: We all know the hon. Gentleman's background. He wants maximum Government interference in the affairs of British Gas. Privatisation will involve less interference and greater


efficiency. I assure the hon. Gentleman that, under the arrangements to be made in the legislation, safety standards will be fully safeguarded and encouraged.

National Coal Board

Mr. Orme: asked the Secretary of State for Energy when he last met the chairman of the National Coal Board to discuss future prospects for the industry.

Mr. Dormand: asked the Secretary of State for Energy if he will make a statement on the current prospects for the coal industry.

Mr. Peter Walker: I regularly discuss future prospects with the chairman, and I am confident that there is a healthy future ahead for the coal industry if it can bring operating costs into line with market opportunities.

Mr. Orme: Is it true that the basis of the new "Plan for Coal" has been agreed without any negotiations with the appropriate trade unions, and that the plan will lead to the closure of at least 50 pits and the loss of 50,000 jobs in the mining industry?

Mr. Walker: No, Sir.

Mr. Dormand: In spite of what the right hon. Gentleman has just said, is he aware that the relationship between the NCB and the miners is as bad today as it was when the strike ended? As we all want a quick return to good industrial relations in the mining industry, will the right hon. Gentleman instruct the NCB chairman to take the pressure off the area directors? Are we to have a continuing dictatorship of the mining industry by MacGregor, or are we to return to local management, which has had such a good record?

Mr. Walker: The hon. Gentleman's analysis is surprising, because the NCB chairman believes that the maximum power should go to the areas. Mr. Scargill's view, that all the power should go to the centre, is in stark contrast to that. There has not been a single word of criticism by the Labour party of the monstrous change of rules that Mr. Scargill is putting forward.

Mr. Andy Stewart: When my right hon. Friend next meets the chairman of the Coal Board, will he discuss the confrontation last Thursday night between the leader of the Nottinghamshire democratic union and Arthur Scargill, which showed the nation why Nottinghamshire is having to fight for trade union democracy?

Mr. Walker: It is surprising that the leader of the Labour party, when calling for the unity of the NUM—a perfectly good measure for which to call—does not recognise that all the disunity has been caused by the president of the NUM.

Mr. Mason: Is the Secretary aware that the major obstacle impeding further progress in the coal mining industry is the sad and sorry state of industrial relations? Will the right hon. Gentleman impress upon the NCB chairman that, once more, local trade union officials should be allowed to work on regular day shifts and that NUM branch secretaries should have two days on the surface to enable them to deal with trade union affairs? Is the right hon. Gentleman further aware that MacGregor and some of his area directors have been harsh and vindictive since the strike ended? Finally, is he aware that, unless this vindictiveness ends soon, there will be no stable industrial peace in the coalfield?

Mr. Walker: Most of the vindictiveness since the dispute ended has been shown by the intimidation of miners who worked. It would be nice to hear the Opposition condemn that. The constant utterances that the only way to achieve anything is by industrial action and taking powers from the regions and from the ballot, which are going on in the NUM at present, are constantly losing customers for the coal industry.

Mr. Eggar: Are the Government encouraging the NCB to negotiate and recognise the new union? Are they encouraging the NCB to attach particular importance to productivity bargaining?

Mr. Walker: It is for the NCB to decide whether to recognise any union. I am sure that it will take that decision in a responsible way. It is vital to the future of that industry and of any other to improve and encourage productivity.

Mr. Foot: Does the right hon. Gentleman understand that his responsibility is directly in dealing with the chairman of the NCB? Instead of making wild charges against everyone else in the industry, why does he not deal with that problem? Is he trying to tell us that there has been no interference by Mr. MacGregor in the way in which south Wales miners and the south Wales organisation run their affairs?

Mr. Walker: I should make it clear that Mr. MacGregor wishes power to go to the areas and negotiations to be taken on a regional basis. He believes that that is the correct way in which to run the NCB. I wish that the same applied to the NUM.

Mr. Skeet: Bearing in mind the coal industry's future, will my right hon. Friend consider strictly limiting the subsidies payable to coal? Will he consider the fact that imports should be related to the price of coal on the world market?

Mr. Walker: There is no doubt that a mass of good investment could and should take place in the coal industry. That could have good results for the industry and all who work in it. I hope that the unions will concentrate on ensuring that that is done and will encourage it to take place. On imports, this is a matter about which there is no total control at present. There is no doubt that Britain can produce coal to supply our industries and the electricity boards with a sensible basis on which to compete in the world.

Mr. Meadowcroft: The Secretary of State has told the House about Mr. MacGregor's intentions, but is he satisfied that those intentions are working in practice? Is it not the case that in the past closures have been carried out area by area and that one of the genuine problems of the recent strike was that they were carried out nationally? What guarantee do we have that that will not pertain in future?

Mr. Walker: The hon. Gentleman should study the position. The recent strike took place because Mr. MacGregor suggested that proposals should be made and examined regionally. If the hon. Gentleman had studied the details of the strike, he would know that what he said was wrong.

Mr. Benn: Will the Secretary of State cast his mind back to March 1980, when the Cabinet, of which he was a member, gave instructions to Lord Soames that a pardon


was to be given to every person in Rhodesia after 15 years of rebellion against the Crown and the most horrendous civil war, and that the best way forward in Zimbabwe was through reconciliation? Will he now look back at that pardon ordinance and ensure that similar act of reconciliation is launched in the British mining industry?

Mr. Walker: I look forward to the right hon. Gentleman seeking reconciliation for the many miners who balloted to work and worked during the strike.

Mr. Sackville: Does my right hon. Friend agree that the industry's prospects would be improved if the Labour party made clear its view on the recent changes to the NUM rule book?

Mr. Walker: In fairness, the right hon. Member for Chesterfield (Mr. Benn) has made his view clear. It is only the leader of the Opposition who has not.

Mr. Strang: Why has the board's policy of victimisation been pursued with such vengeance, especially in Scotland? Is the Secretary of State aware that petitions circulating in the collieries show virtually unanimous support for the men's reinstatement, and that for Church leaders and leading lawyers the matter has become a human rights issue? How much longer must we put up with this injustice in Scotland and elsewhere?

Mr. Walker: The Opposition are divided on the matter. Some, including those who are sitting near to the hon. Gentleman now, are in favour of reinstating all miners, no matter how guilty of violence they are, and, indeed, of taking miners out of prison. I am glad that at least the Leader of the Opposition condemned that.

Wind Turbines

Mr. Speller: asked the Secretary of State for Energy if he will take steps to allocate funds for the installation of wind turbines for agriculture.

The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt): Wind energy is one of the most promising renewable energy sources of electricity generation in the United Kingdom, and my Department's programme, which plans to spend more than £6·5 million this year, is concentrated on large turbines for electricity generation.

Mr. Speller: The provisions of the Energy Act 1976 have allowed people to erect wind turbines to generate power into the grid. Is my hon. Friend aware that one can produce energy for intensive farm use, such as piggeries, at half the grid price, and yet receive a grant for connecting the farm to the grid system? Should we not think about some form of grant to aid the installation of wind turbines? Is my hon. Friend further aware that as wind turbines have become more popular, rating authorities have not infrequently made a rateable charge per annum equivalent to half the revenue obtained, which is negating all the advantages of the Energy Act?

Mr. Hunt: My hon. Friend will know that my right hon. Friend the Secretary of State for the Environment is responsible for rates. I am delighted that my hon. Friend referred to the potential for agricultural applications, because recently my Department funded a study which showed that at present prices and costs nearly 2,000 farms could operate wind turbines economically.

Energy Efficiency Year

Mr. Knox: asked the Secretary of State for Energy if he will make a statement on the resources he proposes to allocate for the promotion of Energy Efficiency Year 1986.

Mr. Peter Walker: The Energy Efficiency Office will be allocating more than £10 million to a range of promotional and demonstration activities. In addition, much greater resources will be provided by a whole range of interested organisations, industries and commercial concerns, which will all join in our national theme of energy efficiency. I anticipate that the overall allocation of resources to energy efficiency year will be substantial.

Mr. Knox: Are many of the ideas suggested in the energy study competition for schools likely to be implemented during energy efficiency year?

Mr. Walker: There were many good ideas in that competition. I am glad to say that, shortly after Question Time, I shall be giving tea to the winners on the Terrace and hearing their views.

Mr. Simon Hughes: In view of the Secretary of State's declared interest in welcoming Hainault high school, some of whose pupils are listening to our proceedings today, does he accept that the clear conclusion of its report is that people will invest in energy conservation if the capital outlay does not take too many years to recoup? Does he further accept that, at local level, we need a facility to allow that to happen, with local authorities as facilitators, the Department as the instigator and millions of people as the beneficiaries? Finally, does he accept that it is his responsibility to instigate such a programme during the next 12 to 18 months?

Mr. Walker: During the past year enormous progress has been made in obtaining the assistance of voluntary groups, especially low-income groups. We shall do all that we can to spread the success that has been achieved during the past 12 months.

Mr. Hannam: Will my right hon. Friend study the position in countries, such as the United States, Denmark and Australia, where the use of home audits has achieved dramatic improvements in energy conservation during the past few years?

Mr. Walker: The audit system is important, and we hope to make considerable progress in that area during the next 12 months.

Polkemmet Colliery

Mr. Dalyell: asked the Secretary of State for Energy what reply he has sent to West Lothian district council, as a result of the evidence sent to him, following West Lothian district council's inquiry into the future of Polkemmet colliery.

Mr. David Hunt: The closure of collieries must be a matter for the NCB in consultation with the mining unions, which can choose to appeal through the colliery review procedure, including appeal to an independent body under the amended procedure.

Mr. Dalyell: Which specific figures in the district council's evidence do the Government dispute?

Mr. Hunt: Thanks to the hon. Gentleman, I have received a copy of a statement by West Lothian district


council, which I am considering. I shall respond to it, and to the point that the hon. Gentleman has just made, as soon as possible. However, nothing that he has said can alter the fact that Polkemmet was flooded at the end of August 1984 as a result of the withdrawal of safety cover by the NUM. That disgraceful act of vandalism can never be excused.

Mr. Eadie: The Minister cannot get away with that statement. Polkemmet was flooded because the director of the National Coal Board would not permit middle management to go in and do the job that was being done in every other coalfield. Is the Minister aware that Polkemmet is important to the steel industry, and especially to Ravenscraig? If he accompanied some of his hon. Friends to Ravenscraig, he would discover that it is importing all the coking coal it needs. Does he accept the need for Polkemmet to be reopened and the fact that, technically, it can be done?

Mr. Hunt: The hon. Gentleman has got all those facts wrong.

Energy Saving (Capital Investment)

Mr. Beith: asked the Secretary of State for Energy what requests for information have been received by the Energy Efficiency Office from local authorities regarding capital investment in energy-saving measures.

Mr. David Hunt: Local authorities have achieved a great deal, but there is considerable scope for further improvement. The Energy Efficiency Office has had some requests for information about the provision of additional funds for energy efficiency.

Mr. Beith: How can local authorities make the energy efficiency improvements which will really help their tenants if they cannot spend capital on doing so? Would not the most practical contribution that the Government could make in this area be a relaxation of the capital restraints on local authorities spending money which they already have in the bank from the sale of council houses, in order to improve the energy efficiency of their properties? Will the Department take the initiative in ensuring that that is done?

Mr. Hunt: Within existing limits, considerable savings can be achieved by local authorities with only modest investment. I hope that, in 1986, which will be energy efficiency year, there will be a substantial increase in this area.

Mr. Forman: Is the Department taking steps to encourage the production of energy from the combustion of domestic and commercial waste? What progress is being made in that direction?

Mr. Hunt: The answer is yes. My hon. Friend is right to highlight the considerable scope for improvement in the burning of domestic and animal waste and in the general area of biomass. That featured largely in our recent statement about the allocation of research and development funds for the coming year.

Mr. Rowlands: Is not the simplest form of energy efficiency for householders, whether tenants or owner-occupiers, the home insulation grant? Is the Minister aware that in 1983–84 there was a 33 per cent. reduction

in such grants in Wales alone, which has been mirrored in other areas? Would it not be better to give maximum encouragement to home insulation grants?

Mr. Hunt: As the hon. Gentleman will know, the history in this area is of an underspend. However, according to the latest figures, there is clear evidence of a substantial take-up of those grants. I hope that this area of funding will be fully spent this year.

National Coal Board

Mr. Nellist: asked the Secretary of State for Energy when he will next meet the chairman of the National Coal Board to discuss future investment in the industry.

Mr. Peter Walker: I meet the chairman of the National Coal Board from time to time, to discuss many issues, including future investment in the coal industry.

Mr. Nellist: Is it not a fact that 11 days ago Mr. Michael Eaton, the National Coal Board spokesman, spoke of 7,000 jobs created by new investment at Selby, at Ashford and at Coventry? When that is set alongside the 70,000 jobs, which is the real target to which MacGregor and the Tory Government wish to cut the industry, does it not show that the last 12 months' struggle of the miners was totally justified, and that any attempt to set up a bosses' union in Nottinghamshire will merely play into the hands of the Secretary of State, MacGregor and the National Coal Board, who wish to run down the coal industry?

Mr. Walker: I am delighted that during the period in office of this Government investment has been at a much higher level than it was under the Labour Government. The National Coal Board wishes to make major investment in the coal industry. I know how delighted the hon. Gentleman's constituents are at the enormous investment that the board has recently announced for his area, as they were delighted when the majority of people in the Coventry pit returned to work.

Mr. Hickmet: Does my right hon. Friend agree that there is a danger that the recent changes in the NUM rule book will persuade existing and potential customers not to use coal as an energy source, whether it be the CEGB, the BSC or industrial users, and that consequently the greatest danger to investment in the National Coal Board is Arthur Scargill's attempt to use the coal mining industry as an instrument of class warfare, a policy which appears to be supported by the leadership of the Labour party?

Mr. Walker: Since the dispute took place, virtually every utterance by Mr. Scargill has been to say how he intends to use industrial action to the maximum in future. The change in the rules, which gives him power to take industrial action at local level without ballots taking place and without necessarily having the agreement of the local people is again an illustration of the type of war that he wishes to conduct, all of which loses orders for the coal industry, all of which stops our programme to get people to convert to coal, and none of which is condemned by the Opposition.

Mr. Hardy: Does the Secretary of State agree that investment decisions and the investment record are matters that should and could be considered by the new colliery review procedures? Will he therefore, when he meets the chairman of the board, tell him that it is about time that


acceptable procedures were introduced, remind him that the board was committed to introduce those last autumn and agree, further, that the Government were certainly also committed?

Mr. Walker: As the hon. Gentleman knows better than most, the board has circulated in great detail its proposal, which very much fits in with all the principles agreed last autumn. The sooner they are implemented, the better I shall be pleased.

Mr. Wrigglesworth: In view of the Government's clear commitment to the future of the mining industry, shown throughout the mining strike, does the Secretary of State agree that he should consult the Nottinghamshire miners, if they so wish, about the future of the industry and future investment in the industry? Does he also agree that any party that is seriously intent upon taking power in the country should be able to do that, without fear or favour?

Mr. Walker: I believe that it is true that the Nottinghamshire miners had no desire to split off from the NUM. They did, however, give due warning that, if the incredible changes of rule proposed by Mr. Scargill took place they would almost certainly have to. At no time in that period was there any attempt by the Labour party to condemn those changes of rule.

Mr. Stanbrook: Would it not assist investment in the coal industry if the National Coal Board did not have millions of pounds invested in private firms outside the industry?

Mr. Walker: I think it will be found that those investments are now very small indeed.

Mr. Orme: Will the Secretary of State now address himself to the future of the industry? Is it not a fact that an authoritative report has been published which states that 50,000 jobs and 50 pits could be in jeopardy? Will the Secretary of State answer that point?

Mr. Walker: I have already answered it once. There is no such report that forms the policy of the National Coal Board. Therefore, I have answered it no once, and I answer it no again. If the right hon. Gentleman, in the interests of the industry, would address himself to the damage that is being done by the leadership of the NUM, he might have some respect.

Straw

Mr. Yeo: asked the Secretary of State for Energy what research is being carried out to develop the use of straw as an energy producing fuel.

Mr. Buchanan-Smith: Within my Department's biofuels programme, we are supporting the development of equipment to produce straw briquettes.

Mr. Yeo: The problem of surplus straw is acute in Suffolk. Is my right hon. Friend aware of the Danish experiment in which farmers' co-operatives use straw as fuel for local heating schemes and are able to use the residue for fertiliser?

Mr. Buchanan-Smith: There is considerable potential for the use of straw. It is estimated that the surplus straw currently burnt in fields could have a potential of about 4 million tonnes of coal equivalent a year. There are interesting experiments abroad. My hon. Friend the

Parliamentary Under-Secretary of State recently visited, and was impressed by, an installation in Denmark, which my hon. Friend mentioned.

Coal Industry Dispute

Mr. Peter Bruinvels: asked the Secretary of State for Energy what plans he has to investigate cases of alleged intimidation and victimisation of miners who continued to work during the recent coal mining dispute; and if he will make a statement.

Mr. Greenway: asked the Secretary of State for Energy what plans he has to investigate cases of alleged intimidation and harassment of miners who continued to work during the recent coal industry dispute; and if he will make a statement.

Mr. Peter Walker: I have taken up with the National Coal Board all such cases brought to my attention and can assure the House that each has received urgent and individual attention.

Mr. Bruinvels: I thank my right hon. Friend for that helpful and constructive answer. Has he seen reports in the News of the World and The Sun, which show that an alarming number of families of miners who worked throughout the strike have been severely victimised, threatened and had their houses daubed, and that many miners have been prevented from returning to work? Can my right hon. Friend advise miners who want to go to work, and their families, how they might be protected and will be able to convict those appalling miners—[Interruption.]—who deny peoples' right to go to work?

Mr. Walker: I am surprised at the hilarity on the other side of the House at such appalling circumstances. There is no doubt that there has been a lot of dreadful intimidation. I am glad that the Coal Board has made it clear that anybody who is found guilty of intimidation will be sacked immediately. In some cases that has been done. The board has organised transfers, early retirement and other means of helping those concerned. I hope that both sides of the House will condemn the appalling intimidation that has occurred.

Mr. Greenway: Is my right hon. Friend satisfied that all cases of intimidation are being brought to light? Does he agree that it would be sensible for police in plain clothes or dressed as miners to accompany miners down shafts to get a feel of what is going on? I think that they will find that there is a great deal more intimidation than has been reported.

Mr. Walker: I am afraid that my hon. Friend is correct. One of the problems of intimidation is that the person being intimidated is often scared to report it. The police and everyone else are endeavouring to do their best to end these totally criminal actions.

Mr. Nellist: Is the Secretary of State aware that in Scotland 70 per cent. of those who were dismissed were lay officials or elected members of strike committees? That is a clear example of victimisation of strike organisers. When the right hon. Gentleman says that miners guilty of victimisation should be sacked, how does he answer the case of a miner in Coventry, Clive Ham, who was accused by the Coal Board of victimisation, found not guilty by a court of law but who still remains sacked? Under the right hon. Gentleman's tutelage, the Coal Board has set itself up as judge, jury and executioner.

Mr. Walker: I should like to hear just one utterance from the hon. Gentleman in condemnation of the appalling violence that has taken place. Those of us who watched some of the events at Bilston Glen on television were only happy that those who caused it should be punished appropriately.

Mr. Strang: Is the right hon. Gentleman aware that both sides of the House oppose intimidation, no matter where it comes from? Does he agree that if the board and the authorities really want to improve industrial relations in the coalfields, they must first reinstate victimised miners?

Mr. Walker: The majority of victimised miners are those who worked during the strike, and they have been victimised ever since. As for sackings, each case has been examined individually.

Alternative Energy Sources

Mr. Colvin: asked the Secretary of State for Energy what funding has been made available for research into alternative energy sources since 1979.

Mr. Buchanan-Smith: Total research and development expenditure by my Department on renewable energy from 1979–80 to 1984–85 was approximately £76 million. The forecast expenditure for 1985–86 is £14 million.

Mr. Colvin: My right hon. Friend is aware that gas, coal and oil are finite sources of energy. Could not a better case be made for the Government reinvesting some of their receipts from fission fuels into research into alternative forms of energy such as tidal, solar and wind energy? When can we expect a go-ahead for the pilot barrage on the Severn estuary?

Mr. Buchanan-Smith: It is worth while studying these alternative forms of energy as my Department is doing by helping to fund research. However, we have to concentrate on research on those sectors which produce the best prospects, and that is what we are doing. As my hon. Friend knows, a study into the Severn barrage is going on now and it is hoped that the report of that study will be received by the end of the year. This will enable decisions to be taken.

Mrs. Clwyd: Instead of putting money into alternative sources of energy, would it not be a better put money into existing coalfield communities, particularly in my constituency, where we have the highest male unemployment rate in Wales–28 per cent. at present? On Thursday one of the pits will come up for review and will possibly close, with a loss of 570 jobs, pushing male unemployment up to 33 per cent. Is that not intolerable in the 1980s?

Mr. Buchanan-Smith: I am sorry that the hon. Lady does not support investment into revewable sources of energy, which is widely supported throughout the country. I refute what the hon. Lady has said about investment in the coal industry, on which the Government have the best record of any Government in recent years. What the hon. Lady says is utterly hypocritical.

Oral Answers to Questions — HOUSE OF COMMONS

Written Questions

Mr. Chapman: asked the Lord Privy Seal if he will bring forward proposals to require that written questions are tabled either by the hon. Member in person or personally written and signed by the hon. Member.

The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): No, Sir.

Mr. Chapman: The hon. Member for Fife, Central (Mr. Hamilton) asked a question on 29 April and pointed out that the number of written questions had doubled in the past four years and now cost over £1·5 million to deal with. Will my right hon. Friend have second thoughts about this? Does he agree that my proposal is fair, reasonable and effective, particularly if my right hon. Friend is not minded to recommend a limitation on the number of written questions that any hon. Member can table at any one time?

Mr. Biffen: Any decision formally to limit the number of questions that an hon. Member may table should appropriately proceed after the matter has been considered by the Procedure Committee.

Mr. Willie W. Hamilton: Is the Leader of the House aware that there is much evidence that this procedure is being abused by certain hon. Members? Is he aware that the hon. Member for Leicester, East (Mr. Bruinvels) is probably the most expensive Member that there has ever been in the House and that his worthless written questions are costing the taxpayer thousands of pounds a year? Is the right hon. Gentleman prepared to take steps to stop that nonsense from that hon. Member?

Mr. Biffen: That is an invidious accusation. It so happens that I have before me a roll of honour of hon. Members who have tabled the largest number of questions, and I have to say that the top three do not include my hon. Friend the Member for Leicester, East (Mr. Bruinvels).

Mr. Peter Bruinvels: I thank my right hon. Friend for defending me. I ask questions on my behalf, I ask them myself, in my own interest and to prevent others from asking questions relating to my constituency. Does my right hon. Friend accept that there are other hon. Members who ask many more questions that I do? Should they not be the hon. Members to whom this question is directed?

Mr. Biffen: Perhaps we should come back from the league table, which I think it indelicate to publish, to the point of the original question. Many hon. Members are uneasy about the practice of hon. Members who sign the question forms and then give them to research assistants to table as they think fit. That is wholly contrary to the spirit of how this place works.

Mr. Shore: It would be quite wrong if any attempt were made to impose a limit on the number of written questions that can be asked by hon. Members. However, it would be interesting to have the reasons of the Leader of the House for rejecting the proposition that written questions should be tabled by the hon. Member in person. What does he have against it?

Mr. Biffen: It is a very interesting proposition that written questions should be not only tabled but written out


by the hon. Member concerned. A very real departure of that magnitude should, I think, proceed after the Select Committee on Procedure has had a chance to examine it.

Research Assistants

Mr. Soames: asked the Lord Privy Seal whether he will take steps to seek to restrict the access of research assistants to the House facilities.

Mr. Biffen: Research assistants are already subject to certain restrictions in their access to House facilities. I would also refer my hon. Friend to the second report of the House of Commons (Services) Committee of this Session, which was debated in the House on 12 July.

Mr. Soames: I hope my right hon. Friend will realise that I was very sad not to be able to be here on Friday. I was attending to my constituents. Does he agree with me that our facilities are being overrun by this monstrous regiment of research assistants? Does he also agree that there is widespread evidence of abuse by some of them? Will he therefore seek radically to recast the rules that guide these procedures?

Mr. Biffen: A number of suggestions were made in the debate. The Sub-Committee, under the chairmanship of the right hon. Member for Lewisham, Deptford (Mr. Silkin) will be considering them, in addition to the original recommendations that were made. I have no doubt that the recommendations that are made during this Question Time will be added to those that were made in the debate on Friday last.

Mr. Beith: If the Leader of the House were to seek to go beyond the sensible recommendations of the Services Sub-Committee, which were debated on Friday, could he not then be accused of seeking to ensure that Ministers are extensively and well advised, but that those who seek to challenge and question Ministers do not have the benefit of such advice?

Mr. Biffen: The usual charge is that Ministers are ill advised.

Mr. Beaumont-Dark: Does my right hon. Friend accept that some Members of this honourable House are willing to give out passes like confetti? Should there not be a limit to the number of so-called research assistants which so-called hon. Members can inflict upon us all? [HON. MEMBERS: "Oh!".]

Mr. Biffen: That is one of the points that was made in the debate on Friday last.

Mr. Speaker: Order. I do not think the House approves of the phrase "so-called hon. Members". Every Member here is an hon. Member.

Mr. Boyes: Is the Leader of the House aware that I am not surprised that the Parliamentary Private Secretary to the chairman of the Tory party does not need research assistants? On the other hand, those hon. Members who are in the serious business of politics—[Interruption.]

Mr. Speaker: Order. I take the view that the hon. Member is very much in the serious business of politics.

Mr. Boyes: Those hon. Members who are in the serious business of politics and who are trying to solve the complex social problems that have been caused by the reactionary politics of this Government need as many

research assistants as possible to help us. If the right hon. Gentleman wants an example, the new board and lodgings regulations are causing massive problems both in my constituency and in the constituencies of other hon. Members.

Mr. Biffen: I think that we are all beginning to get a slight touch of July fever. The Sub-Committee of the Services Committee will be considering this matter. Doubtless it will consider the hon. Gentleman's point, along with others.

Mr. Rowe: Is my right hon. Friend aware that many hon. Members, who find that the increasing number of lobby groups with access to word processors are drowning us with correspondence, are very grateful for our research assistants? I suspect that most of the difficulties that are encountered by research assistants, and come from them, are attributable to the fact that hon. Members do not brief them in the practices of this House as well as they should.

Mr. Biffen: I take note of what I am sure is one of the relevant factors. I undertake to draw the attention of the right hon. Member for Deptford to the points that have been raised this afternoon. They will be important to him when he makes his further studies.

New Telephone Exchange

Mr. Peter Bruinvels: asked the Lord Privy Seal if he will make a statement on the reasons for the decision to purchase a new telephone exchange system for the Palace of Westminster and the criteria which were used to determine that all hon. and right hon. Members and their secretaries should be provided with new telephones.

Mr. Biffen: I refer my hon. Friend to the first report of the Services Committee in Session 1980–81, in which the reasons for a new exchange being required are set out at length. New telephones are required because, among other things, the existing ones will not work with the new exchange.

Mr. Bruinvels: I read the report before tabling this question. To provide the House with these so-called wonder phones with alarms, digital clocks and calculators, not just for hon. Members, but for secretaries as well, seems to be a gross expense, bearing in mind that it will cost £2,037,000 to provide those facilities. Is my right hon. Friend able to say what will happen to the old phones?

Mr. Biffen: The old phones, which were rented, will be returned to British Telecommunications and subsequent use will be made of them. I appreciate my hon. Friend's anxiety that we should not spend more on this than is strictly necessary, but I question whether a secretary should somehow or other have a lesser telephone facility than an hon. Member.

Mr. Dubs: Is the Leader of the House aware that many of us are thankful that we are at long last to have a decent telephone system to replace the decrepit one from which we now suffer, one that has constant malfunctions and gets wrong numbers? It is a welcome step that this House is at last being dragged into the 20th century in at least one area of modern technology.

Mr. Biffen: I am sure that that was intended to be helpful. We are to have a new telephone system because


the demand is such that a new exchange must be obtained. It is not true to say that the present telephone facilities are archaic and impede us in doing our job properly.

Oral Answers to Questions — CIVIL SERVICE

Trade Unions

Mr. Parry: asked the Minister for the Civil Service when he nexts expects to meet the Civil Service trade unions; and what matters he expects to discuss.

The Minister of State, Treasury (Mr. Barney Hayhoe): I will be meeting representatives of some of the Civil Service unions on Wednesday 17 July to discuss, at their request, the pay of senior civil servants.

Mr. Parry: When the Minister meets the unions, will he discuss trade union membership? Will he state whether it is true that the draft new Civil Service handbook no longer encourages civil servants to join the trade union of their choice? If that is so, is it not inferference with the Civil Service trade unions?

Mr. Hayhoe: On Wednesday we will be discussing the pay of senior civil servants. If the unions want to discuss other matters, I am sure that suitable opportunities can be arranged. I understand that the handbook is in draft and is being discussed with the trade unions.

Mr. Forman: When my right hon. Friend meets the Civil Service trade unions, will he make it clear to them that, while it is necessary to keep firm control of public sector pay, including Civil Service pay, all members of the Government recognise the quality and dedication of the work done by the Civil Service?

Mr. Hayhoe: I am happy to endorse what my hon. Friend has said.

Mr. Wrigglesworth: Will the Minister refute the suggestion made in an article in The Times recently by Mr. David West, that the reduction in the numbers of civil servants has come about as a result of reductions in work? Will he also comment on the suggestions by Mr. West that the Government's systems management in the Civil Service is woefully inadequate?

Mr. Hayhoe: The article in The Times by Mr. West was misleading and inaccurate in a number of ways. His direct experience is many years out of date. Staff inspectiion, which was his particular interest, has an important role to play, but the significant reduction in the number of civil servants from 732,000 in May 1979 to under 600,000 today has been achieved in many other ways. I am happy to pay tribute to the Civil Service, which has contributed considerably to an increase in efficiency.

Dr. McDonald: When the Minister meets the Civil Service unions, will he also discuss with them the fact that, despite their continued efforts, the loss of 1,000 Customs and Excise officers since 1979 has contributed to the 750 per cent. increase in heroin smuggling? Will he agree with them that the cut in Customs staff has been extremely irresponsible? Will he admit that the 50 per cent. increase in staff for special investigation will be of limited use because they will be redeployed from Customs staff elsewhere?

Mr. Hayhoe: That is not a matter that is likely to be discussed on Wednesday when I meet the Civil Service

unions. As I said, we shall be discussing the pay of senior civil servants. Perhaps the hon. Lady did not hear my original answer. The hon. Lady is incorrect in suggesting that the reduction in the number of uniformed staff has led to an increase in the amount of heroin coming into this country. She should be aware of the significant increase under this Government of the number of Customs and Excise specialist investigation staff. She should also pay tribute to the significant successes that have been achieved as a result of that.

Private-Public Sector Contacts

Mr. Dalyell: asked the Minister for the Civil Service what is the policy of Her Majesty's Government towards encouraging contacts between senior civil servants and leading City business men.

Mr. Hayhoe: Such contacts form a natural part of the work of many senior civil servants. The interchange of staff between the Civil Service and the private sector has been encouraged over the years by successive Governments as a means of improving mutual understanding between the Government and industry.

Mr. Dalyell: What response have Ministers made to the serious statements contained in an article in the Daily Star on 13 June concerning the case of Hilda Murrell and highlighting an alleged relationship between the distinguished Cabinet Secretary, Sir Robert Armstrong, and Sir Dallas Bernard, a director of Zeus Securities?
For what particular purposes does the taxpayer finance the activities of Zeus Securities? For what purposes does the taxpayer finance the activities of Mr. Gary Murray? I know that a writ has been issued by Sir James Starritt in relation to the article, but ought there not to be a Government statement on these alarming statements?

Mr. Hayhoe: That supplementary question goes way outside the original question. However, thinking that the hon. Gentleman might seek practically to abuse the procedures of the House in that way, I have had inquiries made. While Sir Robert Armstrong has a long-standing personal friendship, though by no means a close one, with Sir Dallas Bernard, he has at no time had any official dealings either with Sir Dallas Bernard as a director of Zeus Security Consultants, or in any other capacity, or with Zeus Security Consultants and he did not know until he read the article in the Daily Star on 13 June that Sir Dallas was a director of that company. I think it wrong that the hon. Member for Linlithgow (Mr. Dalyell) should peddle and give credence to tittle tattle of this kind by his supplementary questions in the House.

Sir Dudley Smith: On a far more important question, is my right hon. Friend aware that the relationship between senior civil servants and the whole industrial spectrum is far better than it was, for example, two decades ago, but that it is still capable of improvement and that we have many lessons to learn from a number of other countries, not least Japan?

Mr. Hayhoe: I agree with my hon. Friend. Encouraging contacts between the Civil Service and industry and commerce is of value to both the public and private sectors.

Mr. Dalyell: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I wish to give notice that I shall seek to raise the matter on the Adjournment.

Merit Pay

Mr. Eggar: asked the Minister for the Civil Service if he will make a statement on the progress in introducing merit pay into the Civil Service.

Mr. Hayhoe: The experimental programme of performance bonuses, which I announced in December last, is now being implemented in Government Departments. The first payments of bonuses will be made during the 1985–86 financial year.

Mr. Eggar: Is not it a pity that the new programme is restricted to the open structure? Should we not be working more rapidly towards being able to make merit payments throughout the Civil Service?

Mr. Hayhoe: This is an experimental programme, and I am sure my hon. Friend will think it right that it should be assessed, monitored and evaluated carefully before any extension can be decided on. But I ought to make it clear that I and my officials are prepared to discuss extensions if they are proposed by the unions.

Mr. Merlyn Rees: If merit pay were introduced for Ministers, would not most of them starve?

Mr. Hayhoe: The right hon. Gentleman must have been reflecting on his own ministerial experience.

Mr. Campbell-Savours: How does the Minister justify the widening pay differential between civil servants and people employed in the private sector?

Mr. Hayhoe: The pay settlement made with the Civil Service this year, which gives an average of 4·9 per cent. to the whole of the Civil Service, is, in the circumstances of the time, fair and reasonable.

Oral Answers to Questions — HOUSE OF COMMONS

Terrace (Teas)

Mr. Greenway: asked the Lord Privy Seal how many teas were served on the Terrace of the House of Commons in the summers of 1955, 1965, 1975 and 1984, respectively; and if he will make a statement.

Mr. Biffen: The number of teas served on the Terrace during summer 1984 was 4,894. Information for the earlier years mentioned in my hon. Friend's question is no longer available.

Mr. Greenway: Is my right hon. Friend aware that the number of people wishing to have strawberries and cream on the Terrace of the House of Commons far exceeds the supply of teas available? That being so, will he seek to extend the season during which these teas are available in suitable facilities, perhaps starting at Easter rather than at Whitsun? [HON. MEMBERS: "No strawberries."] If strawberries are not ready by then, could not we have cherries—Waterloos or Wellingtons perhaps.

Mr. Biffen: I am not aware of this imbalance, but I shall draw it to the attention of the person who matters, my hon. Friend the Member for Cheltenham (Mr. Irving).

Famine Relief

Mr. Tam Dalyell: (by private notice) asked the Secretary of State for Foreign and Commonwealth Affairs if the Government will urgently make available additional lorries to famine relief organisations in Ethiopia and Sudan.

The Minister for Overseas Development (Mr. Timothy Raison): I have decided to provide £1·6 million to Save the Children Fund for the purchase of 40 heavy trucks for Sudan. A further £400,000 will cover local bodywork for the 60 Leyland trucks already presented to SCF, continuing costs of their logistics team, and 10 Landrovers.
I announced on 10 June that we were providing £750,000 for trailers and truck hire costs in Ethiopia. I shall be reviewing the transport position when I arrive in Ethiopia tomorrow.

Mr. Dalyell: I welcome the right hon. Gentleman's visit to Ethiopia and the provision of more transport, which we were told over the weekend was still necessary. But what should I say to constituents of mine who see £40 million-worth of mostly suitable trucks sitting in the car park of British Leyland at Bathgate and hear at the same time on the radio that after all the exchanges in the House there is still a shortage of trucks both for the Sudan and for Ethiopia?

Mr. Raison: I suggest that the hon. Gentleman tells his constituents that, for the 40 heavy trucks, the provision of which I have just announced, we shall be going to British Leyland first to see whether it can provide them.

Dr. David Owen: Will the right hon. Gentleman make it clear whether this is additional to the aid budget or simply, as has happened before, a transfer from one part of the aid budget to another part? Will the right hon. Gentleman look into the possibility of seconding British Railways personnel to Sudan, where the railway network is in a critical state and needs skilled people—as do the ports?

Mr. Raison: The money comes out of the sum that I have set aside for dealing with this very serious problem in Africa, and that is as it should be. We have already provided expert personnel to help solve this very difficult problem with the railway line in the Sudan. We shall continue to do everything possible to make sure that the railway line operates as effectively and as rapidly as possible.

Mr. Teddy Taylor: Although the extra transport is welcomed, is it not deplorable that, as revealed by my right hon. Friend in answer to me on Friday, only 43 per cent. of the food aid promised by the EEC at Dublin last December has been delivered? Is my right hon. Friend willing to discuss with his colleagues how the pledge made to drought-stricken Africa might now be kept?

Mr. Raison: It is not deplorable. There is at present enough food in the ports of the Sudan and Ethiopia and there is no point in piling more food into those ports until it is possible to distribute it. The European Community pledges will be of the greatest value in the months to come.

Let us remember that this is not a short-term problem but one that will last for many months yet. Thank goodness the European Community is doing so much to help.

Mr. Torn Clarke: In view of the Minister's reference to the Save the Children Fund, has he had time to consider last Thursday's request by that organisation that the Government should rescind their decision to withdraw the Hercules aircraft from Ethiopia and Sudan? Has he responded to that request, and will he announce his answer in Ethiopia tomorrow?

Mr. Raison: As I said, when I go to Ethiopia tomorrow I shall be reviewing the transport situation there. The great need now is for road transport. The RAF is doing a splendid job, but when the rainy season is over it may not be necessary for it to continue that job.

Mr. Robin Maxwell-Hyslop: Will my right hon. Friend be having any contact in Ethiopia with the military authorities, who seem to throw all the people out of the camps, though their Government deny that they have instructed the army to do that? Will he see that the useful aid that is given is not frustrated by being directed to camps that are then emptied by the army?

Mr. Raison: I do not expect to have discussions with the military authorities, but I certainly shall be having discussions with Ethiopian Ministers. The whole question of the effective use of the aid that is being provided will, of course, feature prominently in those discussions.

Mr. Tom Cox: The Minister has rightly referred to Sudan and Ethiopia. May we have an assurance that the problems faced by Somalia will not be forgotten? Somalia also has a famine, it has also had many refugees coming across its borders and it also needs help.

Mr. Raison: I recognise that Somalia has difficult problems. The European Community will be able to help Somalia, and we shall certainly bear its needs in mind.

Mr. Bowen Wells: My right hon. Friend has provided considerable aid by way of transport—lorries and aircraft—in helping to deal with the terrible drought, and he is to be congratulated on that. Does he agree, however, that the current need is not for more trucks—in view of the rainy season in the Sudan, when trucks cannot get through the desert, which is flooded—but for research into, and support for, arid agriculture, so as to find a way in which the people can plant crops and reap them year after year, to avoid this problem in future? Will he therefore review the statement, published today, that he made in reply to the Select Committee on Foreign Affairs, in which he said that he did not believe that additional money should be made available? As the right hon. Member for Plymouth, Devonport (Dr. Owen) said, my right hon. Friend has transferred money. In so doing, has he not deprived his Department of the ability to enter into long-term and vital commitments?

Mr. Raison: The short-term and long-term needs are of the greatest importance. We have found the money for the short-term needs out of the contingency fund, from the shortfall and by reallocating the food aid programme, and that has been a wise and successful policy. For the long-term, we provide substantial resources for development, including the development of agriculture, and we are spending well over £200 million a year on development in sub-Saharan Africa.

Several Hon. Members: rose——

Mr. Speaker: Order. I remind the House that I granted the private notice question on the question of additional lorries for famine relief.

Mr. Max Madden: Will the Minister respond to the remarkable generosity of people to the Live Aid concerts at the weekend by agreeing to match pound for pound the amount contributed by the British public following the Wembley concert?

Mr. Raison: I entirely share the view that the Live Aid concert was a magnificient occasion, and everybody who helped to put it together deserves the greatest possible congratulations. In the last financial year we provided £95 million of famine-related aid. This year we are targeting to provide another large amount. That, together with the long-term development aid that we are providing, adds up a very significant sum indeed, and certainly not one about which I need be apologetic.

Mr. Robert Key: Does my right hon. Friend accept that the point he made about the need for lorries and the fact that in the long-term we shall have to replace them demonstrates the need for a continuing and expanding programme? Is he aware that there would be support in all parts of the House and throughout the country for an increase in the budget spent on the Overseas Development Administration of the Foreign Office?

Mr. Raison: I believe that there is great concern throughout the country about the events in Africa, and that is as it should be. We are, of course, bound by our public expenditure policy. However, I can tell the House that within my budget I shall do everything possible to ensure that we apply our resources where they will be of most effect—and Africa, of course, takes very high priority in that.

Mr. Michael Meadowcroft: Is there not a very significant contrast between the voluntary money raised by the amazing Live Aid concerts at the weekend and the attitude of the Government? As there is quite clearly tremendous resonance among the public for support for aid to Ethiopia and the Sudan, why do not the Government look at ways and means of forgoing the money that will go to them from the concerts, which would pay for lorries for Ethiopia and the Sudan?

Mr. Raison: I believe that a sympathetic view is being taken about the tax aspect. Surely the point is that it is uniquely a chance for people to show directly that they wish to contribute. It is entirely admirable that there should be so much voluntary contribution in addition to the large amounts provided by the same people through their taxes. I think that we have nothing of which to be ashamed.

Mr. Colin Moynihan: The whole Chamber echoes the outstanding admiration for and support of all participants in the Live Aid concerts. Will my right hon. Friend ensure that spares for trucks are sent not only in the impending rainy season but going right into next season, which is essential?

Mr. Raison: I think that my hon. Friend is right. Throughout, I have taken the view that the provision of spares for transport is one of the most valuable things that we can do. I certainly do not intend to turn my back on that policy.

Mr. Dave Nellist: While the Minister basks in the reflected glory of the weekend's events at Wembley and Philadelphia, may I ask whether he considers it hypocritical of his Government to run down the bus and truck industry of this country, losing 40,000 car and other related jobs in the city of Coventry during the past 10 years, while at the same time building up EEC food stocks in that city to the tune of £3 million, and to the tune of many hundreds of millions of pounds throughout the country as a whole? Instead of platitudes from the Box, why do we not have a plan for building trucks to take the surplus food from Britain and Europe to where it is needed in Africa?

Mr. Raison: The very substantial contribution of food by the European Community comes, of course, from exactly those surpluses. Without them, it would be very much harder to find the food.

Mr. Tony Baldry: My right hon. Friend will be aware that, a short time ago, the Ethiopian Government promised that they would release a large number of military trucks for use in transporting grain. Recent reports suggest that they have not been wholly forthcoming in meeting that commitment. When my right hon. Friend is in Addis Ababa, will he make it clear to the Ethiopian authorities that the international community expects the Ethiopian Government to co-operate wholeheartedly with Kurt Jansson and the United Nations authorities if they are to continue to receive the same levels of support from the international community that they have received hitherto.

Mr. Raison: I fully understand my hon. Friend's point. It is one of the most important topics that I shall be discussing in Addis Ababa this week.

Mr. Donald Anderson: Does not the Minister agree that the transport crisis was both predictable and predicted some nine months ago? Have not we and the EEC failed in this crucial last stage of delivery from the ports to the people who actually need help?
Will the Minister now consider air-freighting spares for the lorries? Is he convinced that there are adequate teams of mechanics who will be available on the spot to deal with the lorries? Will he reconsider the withdrawal of the Hercules, a point already put to him? Will he give the present position of the trains for which our British manufacturers tendered in January and to which the slow EEC bureaucracy agreed only in June?
Is not part of the tragedy, as has been mentioned, the contrast between the fantastic response of our people and that of the Government, who have not matched that response, who have given not a penny extra in aid in spite of the crisis, and who in real terms in this year, compared with last year, are giving £30 million to £40 million less in Government aid, which almost wipes out the amount of private money given?

Mr. Raison: The hon. Gentleman's remarks are predictable and misleading. We have made the provision of spares a priority throughout. Nobody could have worked harder in trying to help with the transport problems, particularly on the railways, where we have made an exceptional effort. Our RAF Hercules team is unique. It has carried out operational sorties every day since November.
Of course transport difficulties are great, but we must remember that we are not the Government of Ethiopia or


Sudan. Those Governments take the ultimate decisions. We are doing all that we can to help them, but we cannot take over the running of their railway systems.

Mr. John Wilkinson (Ruislip-Northwood): I welcome my right hon. Friend's statement that more transport will be made available to Ethiopia and Sudan, but has internal security in Tigré and Eritrea improved, since the Ethiopian Government's genocidal policy is, to a large extent, the root cause of the misery?

Mr. Raison: As the House knows, the civil war which has been raging in Ethiopia—in Tigré and Eritrea—is one problem which has made it so difficult to get aid to those people who most desperately need it. I shall be talking about that problem during my visit.

Trustee Savings Banks (Ownership)

Mr. Gordon Wilson: I wish to;raise with you, Mr. Speaker, a point of order of which I have given you cursory preliminary notice about the Trustee Savings Banks Bill, which is due to be debated this evening. The three branches to my argument will be related to conspiracy to deceive the House, hybridity and whether the sub judice rule applies.
When the Bill was introduced, the Government White Paper stated in paragraph 4·1 that there was doubt about the ownership of the trustee savings banks. The Bill was promoted, not directly by the Government, but at the request of the trustee savings banks through their central board. It was said that the legislation was required for two reasons—to settle doubt and to create a new framework for the operation of the banks.
The Economic Secretary to the Treasury told the House earlier this year:
The TSBs are not owned by their employees or depositors.
Later the Economic Secretary said:
There is not just uncertain ownership; there is a lack of ownership of the TSBs".—[Official Report, 14 January 1985; Vol. 71, c. 35, 70.]
On the basis of the White Paper and statements by the Minister, we assumed that investigations would be made. This morning a copy of a memorial to counsel and the opinion of counsel dated April 1979 came into my hands. It was by John Murray, QC, to the trustee savings banks' central board about the status of the ownership of TSB (Scotland). I understand that the TSB central board asked for similar opinion of counsel about the status of ownership of the banks in England, Wales and the Channel Islands. I cannot say what the outcome of that will be.
The opinion was specifically requested by the TSB central board and the legislation promoted by the Government is based upon it. Counsel was asked to state:
Who owns a Trustee Savings Bank and in particular:—What is the nature of the relationship between a Trustee Savings Bank and its various categories of customers?.
I shall leave with you, Mr. Speaker, a copy of that statement, but since all my points are based upon the ownership issue I shall quote one more passage. When relating to legal cases, counsel said:
In accordance with the general rules for Scots law of unincorporated associations therefore the assets were to be treated as the property of the members.
On the following page, counsel went on——

Mr. Speaker: Order. The hon. Gentleman is really making a speech of the kind that he might make in a debate. Will he put his point of order to me?

Mr. Wilson: rose——

Mr. Speaker: Order. The hon. Gentleman kindly gave me notice that he intended to raise the matter. I have looked into it carefully and I can give him the answer.

Mr. Wilson: Considering that I intend to allege a conspiracy to deceive the House, I think it worth while to give the background to what has happened. I shall encapsulate it briefly and move on to my three points.
On page 8 of his opinion, counsel said:
I may be thought to have passed too easily over the question 'who are the members'. I do not think that in Scots law this matter admits of much doubt. The members, in my opinion, are these persons who agree to associate for the relevant purposes, and this they do by depositing a sum with the bank under the relevant conditions".


Further down the page, counsel says:
In my opinion the members for the time being, subject to the qualifications I have mentioned earlier, own a TSB.
There is one major trustee savings bank affected, and that is the one covered by the legislation.
At the very end of his opinion, on page 12, counsel says:
But I cannot accept as correct the view that a depositor in dissolution is merely entitled to the return of his deposit and interest at some stipulated rate. The measure of his entitlement is related to produce, not interest, and the TSB is debarred from deriving any benefit from the deposits or produce.
Counsel then adds that the provisions of the relevant Act strongly support that view.
Finally, counsel says: 
It would suggest that the only funds held by a TSB not falling to be handed over to the depositors on dissolution will be the 'produce' of sums deposited on a non-interest bearing basis. For the avoidance of doubt I should state that I see no reason why produce should not include 'capital' as well as `income' produce.
"Produce" is a technical term in Scotland for the reserves of the Trustee Savings Bank.
Either the Trustee Savings Bank's senior trustees have sat on a legal opinion and failed to inform the Government, or the Government were informed of the legal opinion obtained in Scotland and chose to ignore the significance of it and thus mislead the House.
The former Economic Secretary to the Treasury from April 1981 to 1983 is now a director of the TSB central board.

Mr. Speaker: Order. The hon. Gentleman is alleging certain things that the Government may or may not have done. What is the point of order for me?

Mr. Wilson: The point of order—I have already elaborated on the background—is on a matter that is dealt with in "Erskine May" on page 148 of the 1983 edition, where it says that it is an offence to mislead the House.
We have statements on record by a Minister purporting to say that there are no owners of a bank, whereas he is promoting a Bill whch seeks to give away the assets of that bank to third parties without consultation with the owners. We have been given certain information, and it is either correct or incorrect. Therefore, it is a very serious matter, particularly if we recognise that the owners of the Trustee Savings Bank——

Mr. Speaker: Order. These are all matters that are concerned with the debate on the Trustee Savings Banks Bill and with the Government. They are not matters for me. The hon. Gentleman must now put his point of order to me so that I can deal with it.

Mr. Wilson: I was doing that, Sir. I was saying that here we are dealing with a bank which is owned by working people, and the resources of which are likely to be disposed of to speculators.
The whole affair of the TSB is either a contempt of the House or a breach of privilege involving the conspiracy to which I referred. It may go further than that, beyond this House.
My second point of order relates to hybridity.

Mr. Speaker: Order. The hon. Gentleman is going well beyond a point of order. If he considers that it is a

matter of privilege and writes to me in the usual way, I shall look into it with the greatest care, as I have already fully looked into the matters concerning the Bill to which he has drawn my attention. I think that I should perhaps now rule upon it.
I have considered the point——

Mr. Wilson: rose——

Mr. Speaker: Order. The hon. Gentleman got into touch with me to put his point of order and I have looked into it very carefully. He is making the speech that he would make in the debate if he were called. I hope that he may be called.

Mr. Wilson: rose——

Mr. Speaker: Will the hon. Member put his point very succinctly, please?

Mr. Wilson: My second point of order relates to hybridity, which flows from the whole question of ownership. Until now there has been no problem in relation to this aspect in this public Bill, as the assets of all the trustee savings banks were not appropriated to some other ownership. We now find that, in Scotland at least, ownership could be with the depositors. I shall quote from "Erskine May" to assist you, Mr. Speaker.

Mr. Speaker: Order. Perhaps I can help the hon. Member. This is the first time he has drawn my attention to the point that the Bill might be hybrid. It is normal practice for hon. Members to give Mr. Speaker notice of possible hybridity so that he can look into that aspect. I undertake to look into this matter and to rule upon it when the House considers the Bill. I cannot deal with this aspect now.

Mr. Wilson: I shall be very grateful to you, for that ruling, Mr. Speaker. I received this opinion this morning from counsel in Edinburgh and I have only just arrived in the House. I sent a letter to you specifically to give you notice. I am grateful for your statement on that point.
May I mention one last matter? There is a question of the Bill being sub judice because of an action in court. We have information about ownership which completely changes the whole picture of legislation. I am raising this point of order because we may be in danger of perpetrating a scandal on the reputation of the House by seeking at this stage to deal with legislation that is sub judice and may be subject to subsequent inquiry.

Mr. Speaker: I have looked carefully into the matter to which the hon. Member drew my attention. I remind the House of the terms of the sub judice resolution of 23 July 1963 which is prefaced by the words
subject … to the right of the House to legislate on any matter."—[Official Report, 23 July 1963; Vol. 681, c. 1417.]
There cannot be any question of debate on the Lords' amendments to the Trustee Savings Banks Bill being affected by the sub judice rule.

Mr. Dennis Skinner: The hon. Member for Dundee, East (Mr. Wilson) referred to hybridity. You were a Member, Mr. Speaker, when a previous occupant of the Chair had to face a similar situation with respect to the Aircraft and Shipbuilding Industries Bill. He had to make a study of that matter and the debate on that legislation changed dramatically because of his ruling.
The first matter raised by the hon. Member for Dundee, East concerned Lord Bruce-Gardyne and one or two others


having their fingers in the pie and obviously making a killing. The second point on the ownership argument is one of which you should take account, as your predecessor did. In view of the previous decision on the Aircraft and Shipbuilding Industries Bill, it would be advantageous for those of us who were not made aware of this problem until the past few minutes if the debate on the Trustee Savings Banks Bill were suspended and dealt with at a later stage. You would be able to make a ruling, Mr. Speaker, and we could delve more deeply into what could be a question of fraud and conspiracy by Government Members either in this place or in the other.

Mr. Speaker: The hon. Member is always a great supporter of the Chair, and I am most grateful to him for his advice. I have already said that I shall look into the matter. I shall certainly do so before we consider the Bill.

American Bar Association (Visit)

Mrs. Ann Clwyd: On a point of order, Mr. Speaker. My point of order is brief. I am sure that you are aware that the facilities of the House have been severely interfered with today because of the presence of hundreds of visiting Americans. The Welsh room has been turned into a first-aid room, without prior consultation with Welsh Members. The parking facilities for disabled Members have been converted into a portaloo for the visiting Americans. In future, Mr. Speaker, will you give us notice of such changes? Are we being well paid for the loss of facilities?

Mr. Speaker: I shall draw the matter to the attention of the Services Committee. I was not aware of the point that the hon. Lady raises. I am aware that the American Bar Association is holding its meeting here, because I was present this morning in Westminster Hall.

STATUTORY INSTRUMENTS

Mr. Speaker: By leave of the House, I shall put together the Questions on the motions relating to draft statutory instruments.

Ordered,
That the draft Electricity (Borrowing Powers) (Scotland) Order 1985 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the Customs Duties (ECSC) (Amendment No. 10) Order 1985 (S.I., 1985, No. 1027) be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Town and Country Planning (Fees for Applications and Deemed Applications) (Amendment) Regulations 1985, be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Lennox-Boyd.]

Opposition Day

[18TH ALLOTTED DAY] [SECOND PART]

National Health Service (Pay)

Mr. Charles Kennedy: From one argumentative Scot to another I beg to move,
That this House believes that district health authorities and Scottish health boards should not be expected to find the extra resources in the current financial year that are now necessary to implement the Government's decisions arising out of the recommendations of the pay review bodies; and further believes that if no extra money is provided from the Contingency Reserve there will be a damaging in and unacceptable reduction in real terms in standards of health care.

Mr. Speaker: I have selected the amendment in the name of the Prime Minister

Mr. Kennedy: In moving the motion, our task and objective is to highlight the disgraceful state of affairs into which the Government are plunging the National Health Service and important branches of it by rather inadequate and third-rate stealth, and to offer a constructive solution to the present financial paralysis facing many health authorities and the nation.
My hon. Friend the Member for Woolwich (Mr. Cartwright), in a question to the Prime Minister, asked whether
any pay settlement for the nurses which is above 3 per cent. must be paid for by savings inside the National Health Service? … Is that not an appallingly unfair way to treat a dedicated profession?"—[Official Report, 4 June 1985; Vol. 80,c. 153.]
If the Minister for Health speaks this afternoon, he may have to behave more in his capacity as a Queen's Counsel than a Privy Councillor. The more one studies the Government's financing of the NHS, the more one realises that the description applied to the former Chancellor of the Exchequer in the previous Tory Government could well be applied to the Minister for Health, who displays all the attributes of a barrister trying his best to defend his client without realising that his client has seen the light and changed his plea to guilty.
The unfairness which my hon. Friend tried to highlight was that the lack of extra cash to fund the rewards would lead to job reductions. The complete lack of extra cash in the aftermath of the pay review body recommendations will, as an inevitable and direct consequence of ministerial decisions, lead to a lowering of health provision and a decline in the quality of patient care. That is why the alliance describes the Government's NHS policy as cuts by stealth at the expense of patients. Today we seek to highlight the plight of the NHS, and to persuade the Government to make extra cash available from the contingency reserve.
It is worth putting into context the role and position of nurses within both the NHS and the community as a whole. Who better to quote than the Minister? In a debate on the NHS, referring to the nursing profession's pay increase, the Minister said:
The Government have made it available to them, because we recognise their abstention from industrial action and the fact that the country, the Government, and the patients in particular, owe them a great obligation. It is irrefutable that it is good news for nurses to have major pay increases, in the second instalment, particularly for the staff nurses and ward sisters. It is irrefutable


that it is a major advance for the nursing profession to have a lasting system."—[Official Report, 2 July 1985; Vol. 82, c. 216.]
Those are noble and honourable sentiments, which will command support from both sides of the House. It is sad that, characteristically, the Minister is not living up to his rhetoric at the Dispatch Box in his funding of the NHS.
The Minister and the Secretary of State for Social Services have confirmed that the cost of the pay review body awards would be about £240 million in England in 1985–86. The Under-Secretary of State for Scotland, the hon. Member for Argyll and Bute (Mr. MacKay) who is responsible for health in Scotland, is present, and I shall deal with the Scottish position later. DHSS Ministers make great play of the fact that this year they are cash allocating an additional £500 million, which is equivalent to 5·5 per cent., to branches of the NHS. They refer in particular to the hospital and community health services, and rightly so. However, we must consider what the figure means when it is analysed carefully and beyond the rhetoric of Ministers.
The January 1985 public expenditure White Paper notes that the hospital and community health services will account for more than 70 per cent. of the NHS budget. In 1985–86, current expenditure will increase by 5·8 per cent. over last year's total. The inflation rate, which the Government estimate at 3·5 per cent. and which will produce a notional real terms increase of 2·3 per cent., reflects the Government's general illustrative assumption of a 3 per cent. pay rise in the public sector and a 5 per cent. general price rise in the NHS sector. Those figures are taken directly from the Government's White Paper.
However, there is an important qualification and, for the purposes of the debate, a fundamental point to be made. The assumptions about wage and price increases are fundamental to the forecasts, because the 2·2 per cent. real growth figure has disappeared as a result of the 6 June doctors and nurses pay review body reports. The additional pay costs in 1985–86 for cash-limited NHS services will be 5·4 per cent. for doctors and 5·6 per cent. for nurses. The inflation rate or relative price effect estimate has been pushed up to nearly 6 per cent.—I shall return to that figure and quote the Minister shortly—according to the Social Services Select Committee's sixth report, which was published on 22 June. That would mean a real terms decrease of about 0·3 per cent., which is 0·2 per cent. higher than what the DHSS now concedes was one tenth of a 1 per cent. decrease in 1984–85.
Those detailed figures are based on a careful and serious analysis of the projections and on hard accurate statistics, which the Government have made available in their forecasting and White Paper. The figures are extremely damaging because they point the way to further reductions in patient care and health service facilities to fund the costs of legitimate and well-deserved pay increases for the professions allied to medicine—nursing, health visiting and midwifery.

Mr. Richard Hickmet: rose

Mr. Richard Tracey: rose

Mr. Kennedy: I shall take my pick, but it is something of a Hobson's choice.

Mr. Hickmet: That is not a nice way to describe my hon. Friend and me.
The hon. Gentleman talks about further cuts. Why does he expect further cuts when, since May 1979, the NHS budget has increased by 20 per cent., there are 55,000 more nurses, 6,000 more doctors and dentists, more outpatients and inpatients have been treated, and there are more day patients and home visits? Why does he speak of further cuts when that is manifestly not the case? Does the hon. Gentleman concede that the Government's record on the NHS is the finest since the war?

Mr. Kennedy: I have been a Member of the House for only two years, but I must tell the hon. Gentleman, who entered at the same time as me, that the gullibility of Tory Back-Bench Members never ceases to amaze me. Let us consider the real world and leave the Thatcherite monetarist universe which the hon. Gentleman seems to occupy. Let us consider what those in the front line of the service say about the figures. The hon. Gentleman did not listen—[Interruption.] The public school boys on the Treasury Bench should keep quiet, because we are quoting their figures.
The hon. Member for Glanford and Scunthorpe (Mr. Hickmet) did not listen to what I said. When he talks about last year's figures, he should remember what I said about a 0·1 per cent. cut in real terms, which, on current predictions, will be trebled this year. That will be extremely damaging.
I hope that the hon. Gentleman will agree that the National Association of Health Authorities is aware of the difficulties and realities of providing health care. The Minister for Health visited Cardiff last month, and much good that did the Tory party when the voters were asked for their opinion—[HON. MEMBERS: "Cheap."] It was not cheap. I was an expensive mistake for the Tory party to send the Minister to address the annual conference of the National Association of Health Authorities. To be fair to the Minister, we should argue on his terms this afternoon and use his words as the parameters within which the debate should be conducted. When the general manager of West Lancashire health authority asked him what the funding consequences would be for next year's allocation, the Minister said:
I do not accept that the award poses any threat to standards of care.
Within the NHS, the Minister's is a lone voice compared with what is being said in the authorities of England and Wales and in the Scottish boards. He continued:
I just hope we are not looking too far ahead"—
it is good to know that the Health Service is being governed by ad hoc expediency
with the implications of this"—
—[Interruption.] Those are the Minister's words. Hon. Members should heckle him, not me. The Minister continued:
After all, we have until next February to fund the full award and I hope we will not hear about cutbacks, which I frankly regard as the routine small talk of NHS politics and not necessary in a well-managed and well-run health service.
That demonstration of arrogance and insensitivity to those who must make the painful choices that will be made necessary by having to fund the nurses' pay award is extremely disturbing.
We should examine what some of those who live in the real world said in response to the Minister's comment. The


national association passed a motion calling on the Government fully to meet the costs of the award. The member of Salford health authority who moved the motion said that her authority had already used its efficiency savings—no doubt the Minister will try to tell us about those—and faced a burden of £1 million for wage claims during next year. The person who seconded the motion, who came from North Tees authority, said that patient care would suffer if authorities had to find the cash for awards. Simply to balance the budget, his authority would have to make a 2 per cent. cut, and he referred to this as "crisis management" leading to inefficiency. I ask the House to compare that statement with the Minister's statement that the routine small talk of NHS politics is
not necessary in a well-managed and well-run health service.
We now know who realises the damage that will be caused by the Government's decision in relation to the nurses' pay award.
However, the matter goes deeper and further than that. During a debate on nurses' pay on 25 March this year, the Minister talked about the expected outcome of the pay review structure. Hon. Members should not let him off of that hook this afternoon. He said:
The result is that all we are doing is facing everybody—Government, health authorities, staff and review body—with the reality that there is a relationship between pay and service provision."—[Official Report, 25 March 1985; Vol. 76, c. 195.]
I am glad that we have established that reality, because the thrust of the argument by alliance Members today will be that, given that the Minister has signalled clearly that we cannot divorce the two elements of Health Service management and delivery of patient care, it is wrong for the Government to argue that, even if they do not provide additional funds to meet the pay increases, there will be no detrimental impact on patient care.

Mr. Tracey: rose——

Mr. Kennedy: We have had Tweedledum, so we had better have Tweedledee.

Mr. Tracey: Perhaps the hon. Gentleman will give serious instead of frivolous consideration to my point. He talked about service provision. Has he heard about cost effectiveness in service provision? Will he say anything about putting ancillary services out to tender? Has he said a word to the officers of his local health authority about putting services out to tender? He must realise that many costs can be saved in that way.

Mr. Kennedy: Like the hon. Member for Glanford and Scunthorpe, the hon. Gentleman did not listen to what I said at the outset. I quoted from a representative of one authority at the NAHA conference, which the Minister addressed, who recognised immediately that the efficiency savings that the authority had achieved, and which I hope the Minister will confirm have been achieved in many cases, have already been swallowed up as a result of the Government's decision. I was extremely interested to note that the Institute of Health Services Management said that it makes nonsense of Health Service management to try to encourage efficiency savings and then to tell managers that those savings cannot be ploughed back into providing better patient care.

The Minister for Health (Mr. Kenneth Clarke): The hon. Gentleman has been remarkably dismissive, as he is entitled to be, of what I said. He used my words when

describing an increase which, this year, will be more than 5 per cent. on part of the pay bill of all health authorities when it comes to meeting the review body awards. Given that authorities have had a cash increase this year of 5·5 per cent. and that they are making cost improvements on top of that, has the hon. Gentleman bothered to check the assertions of one stray delegate from Teesside, or is that his only evidence for sweeping aside the care fully considered financing of the nurses' pay award?

Mr. Kennedy: The Minister is being extremely helpful, because he is falling back—I shall quote his words from the debate of 2 July—on the argument that he used against the hon. Member for Aberdeen, North (Mr. Hughes), who gave an example from his constituency. The Minister said:
I prefer that intervention"—from a supporter of his——"to anecdotes about a man in Aberdeen.
When it comes to savings, the Minister should take seriously the views of any Aberdonian. He continued:
It is obvious, apart from anecdotal evidence"—
this from a Minister who talks about me being dismissive—
that the Opposition have produced from a few places, that pay for nurses and improving the services can go hand in hand if one continues to improve the way that the service is delivered, as the Government have."—[Official Report, 2 July 1985; Vol. 82, c. 215–16.]
It is interesting that the Minister is sticking to that trenchant defence today.
Let me give a little more anecdotal evidence, and consider the difficulties of Bloomsbury health authority. I know that the hon. Member for Holborn and St. Pancras (Mr. Dobson) is extremely worried about this matter. The authority faces a shortfall this year of about £1·4 million, and the figure could rise to double that.
In Northampton, the district health authority chairman has already said that he is envisaging a £500,000 cut in terms not only of expanding—we are talking not just about pushing the frontiers further—but of maintaining the service of health care.
In Canterbury, the health authority has lobbied furiously, and the nurses in particularly have met their constituency representative to express their grave concern and the fact that they feel that they are being held open to moral blackmail. That is their phrase.
With regard to the Under-Secretary of State for Health and Social Security, the hon. Member for Oxford, West and Abingdon (Mr. Patten), his district health authority has expressed its grave concern, as no doubt he is aware, about the effects in the area.
As one piles up case after case, it is not enough to be dismissive. The Minister has been dismissive about the anecdotal evidence, but this is the real front line health care, and these are the people who are having to make the unpalatable choices.

Mr. Frank Field: On the question of anecdotal evidence, would it not be an innovation in such a debate to hear from Conservative Members anecdotal evidence that the standard of health care in their communities is increasing? Is not one of the problems that, despite the figures which the Government publish, when we go to our constituencies, constituents report cuts rather than increases in services?

Mr. Kennedy: I think that the hon. Gentleman hits the nail on the head. He is correct in pointing out that that kind


of constituency surgery experience is by no means confined to Opposition Members; it is also apparent on the Conservative Benches.

Mr. Kenneth Clarke: The hon. Gentleman keeps referring to me. He began his search for further evidence by citing the example of Bloomsbury district health authority. He knows perfectly well that what is happening in Bloomsbury has nothing whatever to do with the nurses' pay settlement. It has a great deal to do with the implementation of the redistribution of resources between Bloomsbury and other parts of that district and of the country. As the RAWP policy now being implemented by Bloomsbury was introduced by his right hon. Friend the Member for Plymouth, Devonport (Dr. Owen) and has been supported by his party throughout, would he please withdraw Bloomsbury and its £1·5 million as an example of anything to do with the debate?

Mr. Kennedy: I do not know how recently the Minister for Health spoke to Bloomsbury, but we spoke to Bloomsbury last week. He is quite right to say that my right hon. Friend the Member for Plymouth, Devonport (Dr. Owen) introduced the RAWP formula and policy. He is also right to say, as I pointed out in the debate on the National Health Service cuts less than two weeks ago, that we continue to support the thrust of that policy. But he is quite wrong to try to attribute all the difficulties and ills affecting Bloomsbury to the pure product of the RAWP formula. He knows as well as I do that much of the difficulty which Bloomsbury is facing in terms of the £1·5 million, and indeed almost twice that amount, which it is having to find from the figures which it has presented, comes largely from the lack of additional revenue resources which are being made available to implement the pay review body recommendations. It is typical of the Minister to try to deflect the argument on to other ground and to argue some other formula, which is not the core of the debate, to provide the shield for his own inadequate resource support for the National Health Service.

Mr. Laurie Pavitt: Does the hon. Gentleman recall that Golden Square hospital, to which every deaf person in the country has been grateful, and which is attached to the Royal National throat, nose and ear hospital, is a victim also? It is a constituency case in which we know that everything is good, yet the hospital is closed.

Mr. Kennedy: It is interesting to hear in the House and in the National Health Service generally the contrast between the ivory tower which the Minister seems to occupy in regard to NHS funding and the reality in the streets and communities where patients are worried and nurses are disillusioned and depressed about being given a phased pay increase. It is being made clear locally that this can be borne only on the backs of cuts in provisions elsewhere.

Mr. Hickmet: rose——

Mr. Kennedy: I shall not give way. I have given way quite a few times. I look forward to the hon. Gentleman's contribution.
I turn briefly—the House will appreciate that it is only fair that I should—to north of the border, Scotland. Thinking about the other land, Wales, I am

delighted to note that the cuts in the Health Service and the failure of communication and of content of policy exemplified and personified by the Minister were an important item on the agenda in the Brecon and Radnor by-election. I hope that my hon. Friend the Member for Brecon and Radnor (Mr. Livesey) will catch your eye later, Mr. Deputy Speaker, and put the case for the people of Brecon and Radnor who forcefully identified the paucity of the Government's policy.
The Minister will have heard my views on several other occasions, so I shall not dwell on the difficulties which the Highland health board is encountering. In some respects it is akin to the problems which Livingston is encountering with the new West Lothian district general hospital. It is like something out of "Yes, Minister". It has been told that it can open up new and important technological facilities, which we all welcome, but is being given not a penny extra to run them. Highland health board, for example, has two new hospitals, one in Inverness, which will be opened in August, and one in Wick, which we very much welcome. However, in response, Highland health board had to issue a consultative document which envisaged the effect of the closure of two hospitals in my constituency and in the island of Skye—the reduction of maternity facilities to two beds on Broadford at the south end of the island. Those are the kind of hard-line cuts which are having to be envisaged to meet the revenue implications which arise from lack of Government support. The situation will worsen as a result of the pay award.
It is interesting that the position is no better in Ayrshire or in the health board in Argyll.

The Parliamentary Under-Secretary of State for Scotland (Mr. John MacKay): Does the hon. Gentleman not realise that the SHARE formula, which is the equivalent of RAWP in Scotland, was designed by the last Labour Government, supported by most of his hon. Friends, in such a way that central Government did not keep back money in order to help with new hospital opening? It was agreed then that all the money should be disbursed and that health boards should plan for the future opening of hospitals. That is what Highland health board has done with Raigmore which is being opened, has patients in it and is in no way like the hospital in "Yes, Minister".

Mr. Kennedy: It is amazing to hear the Minister sound like an Opposition Front Bench spokesman. He blames the previous Government when his own party was elected to government in 1979. If he thinks that the policy is damaging and if he finds the reductions in patient care offensive, why does he not change the policy? He is the Minister with responsibility and authority to implement such changes. We know why only too well. As he proved in such matters as the limited list, he is willing to lie down at the feet of the Treasury rather than fight his corner for Scottish health provision.
We argue today that cash must and should be found. We specifically earmark the contingency reserve as one possible area where cash can be made available. It has been deliberately set high this year and increased by £2 billion which, on the other side of the swings and roundabouts, will mean a further deflationary measure elsewhere in the economy. The contingency reserve has been increased by £2 billion. That is probably due to the Chancellor learning from his experience of a £3 billion to


£4 billion overshoot last year. The public sector borrowing requirement currently is set at about £7 billion—approximately one third higher than last year. It would appear that the Chancellor is going to allow for a further £3 billion to £4 billion overshoot this year. We do not know exactly how the Government view public expenditure and whether they are proud or ashamed of it.
The truth about NHS expenditure is that a lot of the overshoot—the item which we are debating today being a notable exception—often comes about by default rather than by design. It comes about through demographic pressures and the pace and pressure imposed by medical technology. It comes about through increasing equipment costs in a financial year. That is why at the time of the Budget, alliance Members argued that PSBR should be increased, and we were quite unashamed about that. The proposed increase to £9 billion was relatively modest by international standards. We said that it would be expansionary, that it would require more borrowing and that we should have to find money to increase real expenditure on the Health Service by 1·5 per cent. per year. Such an increase only begins to make some inroads not so much in keeping pace with expenditure but pushing forward the frontiers of health care. That must be a better resource to fund welcome awards for nurses, widwives, health visitors and other allied professions. We should not forget that there will be more cost increases, which will increase the pressure. Anything less than that approach amounts to a serious cut by stealth.
It will be interesting to see how the Centre Forward Conservatives decide to vote at 7 pm. If they support the Government amendment, which is thoroughly fraudulent and bears no resemblance to the funding problem, they will be supporting later this year, and even more savagely next year, further demoralising, debilitating cuts which alliance Members firmly oppose, based on our carefully costed economic programmes which were published at the time of the Budget. We will try to reverse that trend after the next general election when we assume government.

The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Patten): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
`congratulates the Government on implementing the recommendation of the Health Service Pay Review Bodies and awarding a fair pay increase to all the staff concerned, with particularly high awards for staff nurses and ward sisters; notes that nurses' pay has risen by 23 per cent. in real terms between April 1979 and March 1985 and will rise significantly this year as a result of the Review Body award; welcomes the 5·5 per cent. increase in health authority and health board funding which, together with the extra resources gained from cost improvement programmes, will enable service developments to take place in addition to the funding of the pay award; and notes with approval the continuing increases in the number of patients treated by the Health Service.'
If I was attempting the briefest possible opening speech, it would go like this. Thanks to my right hon. Friend the Secretary of State for Social Services and my right hon. and learned Friend the Minister for Health, we now have a record number of nurses paid record salaries helping a record number of patients in a National Health Service which is funded at a record high. However, after what the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) said, it looks as though a bit more is needed.
The motion shows a surprising lack of realism. Rather surprisingly, alliance Members seem today to want to indulge in the luxury of ignoring the substantial improvements that have been made in the Health Service during the past few years. The hon. Member for Ross, Cromarty and Skye is generally a reasonable sort of bloke. We listen to him with care and interest and sometimes with respect for him as a bit of a prodigy—a Boris Becker of the Highlands and Islands, even down to the correct patination.
On 2 July, the hon. Gentleman made some criticisms of Government policy and mentioned the funding of the nurses' pay award. Unlike the Labour Front Bench that day, the hon. Gentleman was realistic about some of our achievements and, unlike today, he was prepared to give credit where credit was due. He talked of our "sensible ideas" and recognised
that cuts in the number of beds do not always mean that there are cuts in health care."—[Official Report, 2 July 1985; Vol. 82, c. 229.]
I welcomed that speech and was looking forward to today's. Alas, today, leading for the Social Democratic party, he seems, in view of his talk of cuts by stealth, accusations about public schoolboys on the Front Bench and savage personal attacks on my right hon. and learned Friend the Minister for Health who, as we all know, is not a robust spirit, to have caught more than a touch of Meacheritis during the weekend. I hope that he will recover soon and return back to his old, balanced, self.
We went over much of the ground that the hon. Gentleman covered today in response to a similarly ill-conceived motion moved by the hon. Member for Oldham, West (Mr. Meacher), who we are pleased to see on the Opposition Front Bench. The scene set by my right hon. and learned Friend in that debate hardly lends itself to the prospect of overblown damaging long-term reductions such as the hon. Member for Ross, Cromarty and Skye would have us believe. I shall not repeat what my right hon. and learned Friend said in that debate as we have only until 7 pm and many of my hon. Friends hope to speak.
Nobody would dispute the importance of paying dedicated staff a fair wage for their vital work. I believe that we are achieving the right balance in the NHS. Our concern for the Health Service is amply demonstrated by what we have done for nurses since 1979. There are four main points, all of which, uncharacteristically, the hon. Member for Ross, Cromarty and Skye skated over. First, between April 1979 and February 1986, nurses' basic pay rates will have risen by an average of 111 per cent.—more than 30 per cent. ahead of the forecast rise in prices during the same period.

Mr. Robert Hughes: Will the Minister give way?

Mr. Patten: Secondly, we have reduced nurses' working weeks from 40 to 37·5 hours in 1980–81——

Mr. Jerry Hayes: With no loss of pay.

Mr. Patten: —at a cost of £116 million. As my hon. Friend the Member for Harlow (Mr. Hayes) says, there have been substantial increases in pay, not losses.

Mr. Robert Hughes: Will the Minister give way?

Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Gentleman knows that it is for the Minister to decide whether to give way.

Mr. Robert Hughes: On a point of order, Mr. Deputy Speaker. It is difficult for the Minister to decide to give way when he turns his back on the House and is not aware that an hon. Member is trying to intervene.

Mr. Patten: I apologise unreservedly if I have offended the hon. Gentleman, but I shall not give way to him.
Thirdly, we are now employing more nurses than ever before. The House has heard some criticisms of our conduct of the NHS, but I can announce that the manpower figures for March 1985, which we have just received, reveal that the NHS in England has 401,200 nurses—the most in its history.

Mr. Frank Field: Full or part-time?

Mr. Patten: An extra 42,500 whole-time equivalents have been employed in England since we came to office. The equivalent figure for Scotland is 6,358. Even if we take account of the reduction in the nurses' working week, 18,900 more nurses are on the wards in England. Within those increases, the proportion of fully trained nurses is also rising. More and better care is being given on the wards.

Mr. Hickmet: My hon. Friend will recall the challenge made by the hon. Member for Birkenhead (Mr. Field), stating that the Government cite the blanket figures of 42,000 in England and 6,000 in Scotland. Is my hon. Friend aware of the position in Scunthorpe general hospital, where the number of staff has increased by 55 in the past year, seven of whom are paramedical staff and five of whom are doctors, where there is a new £30 million building programme and where a new psychiatric wing opened last year?

Mr. Deputy Speaker: Order. I remind the House that this is a short debate and interventions, particularly from those wishing to catch my eye later, will prevent hon. Members who wish to make contributions from doing so.

Mr. Patten: I am aware of the improvements to which my hon. Friend the Member for Glanford and Scunthorpe (Mr. Hickmet) referred. I was in the Humberside area two Fridays ago and I heard about how pleased people are with the developments in hospitals such as that in my hon. Friend's constituency and in the nearby hospital in Grimsby.
Fourth and last in the list of improvements for nurses, is the establishment of the new review body to make recommendations about appropriate pay levels. This is a most important step foward. There can be no question but that this represents a major advance for the nursing profession. Nurses have never had their pay determined through a standing system of this type and the two major inquiries that produced for a while substantial pay increases for nurses—Halsbury in 1974 and Clegg at a later stage—were one-off exercises. Consequently, pay levels, for example those established by Halsbury, were quickly eroded as a result of the high inflation under the last Labour Government. By 1979, the pay awards had been written off by inflation. Is the Labour party proud of that? It cannot be. I do not believe that the Labour party did anything other than let nurses and the nursing profession down badly.

Mr. Teddy Taylor: While the Government have every reason to congratulate themselves on this magnificent achievement, does my hon. Friend

accept that, under Governments of both parties, there is a special problem of underfunded districts and overfunded regions? Will he be prepared to look into this problem urgently, particularly as Southend is one such area?

Mr. Patten: My hon. Friend knows that I am concerned about the problems of funding in the Health Service in Southend. He has already been to visit me and talk about these matters. He knows that discussions are going on between his health district, the North-East Thames regional health authority and my Department. We are continuing to look at the problem of the Southend health district and I take this opportunity to congratulate its excellent chairman and all those who work in it on what they are doing.
I am sure that the setting up of the pay body has been welcomed, not only by nurses but by everybody in this country who feels an enormous debt of gratitude for the magnificent work that nurses do. Against this background, which was ignored by the hon. Member for Ross, Cromarty and Skye, I move on to the arguments about the 1985–86 pay awards and their funding. I thought that the SDP was keen on fair and even-handed treatment, but the hon. Member looked at the one without having set the scene of the other.
We would have preferred to be able to implement the latest set of review body recommendations all at once instead of in two stages. However, we had to strike a careful balance between the speed of implementation of the awards and the capacity of the NHS to absorb these major pay increases without damaging patient services. Our evidence to the review bodies for both nurses and doctors clearly spelled out that no additional funding would be forthcoming on top of the large increase in cash that had already been made available in the general allocations. It is no good pretending that pay can somehow be divorced from the realities of spending generally in the NHS. We have faced up to this, as any Government must, and have made our position abundantly clear. Pay accounts for between 73 and 75 per cent. of the NHS annual revenue budget.
Nor should it be overlooked that the full rates recommended by the review body for nurses and midwives, like those for doctors, will be in payment well before the end of the financial year. I take just two examples. First, this means that ward sisters and staff nurses, the main clinical grades, will be on pay rates between 9 and 14·3 per cent. higher than they were in 1984. In layman's terms, forgetting percentages, this means that from next February we estimate that the average earnings of a staff nurse will have risen by £11·50 per week and by £21·40 per week for a ward sister. These are very considerable increases.
Secondly, the position of student nurses has improved. They get an increase of £3 to £5 a week. Before Opposition Members start talking about the erosion of pay awards by increases in lodging charges for those in residential accommodation, in which a number, but far from the majority, of student nurses are housed, I point out that residential accommodation charges have gone up by 44p.

Mr. George Park: Will the Minister say something about the effect of this award on nurses' night duty payments?

Mr. Patten: The hon. Gentleman has in front of him, or he would have if he went to the Library or looked at


Hansard, the pay agreement arranged between the nurses, the Royal College of Nursing and the Government. The nurses have settled on the figure announced for this year, which includes all their duties. If the hon. Gentleman is telling me that he is unable to recognise genuine improvements in the position of a staff nurse getting £11·50 a week more or a ward sister getting £21·40 a week more, he is blind to the facts. I am afraid that we have to use facts in place of absurd arguments.
I am sure that right hon. and hon. Members on both sides of the House will be pleased to learn that the new pay rates for both nurses and the allied professions have now gone out to health authorities and should be reflected in the August pay packets.

Mr. Jeremy Corbyn: rose——

Mr. Patten: I have given way a great deal already and I trust that the House will forgive me for not giving way any more in the interests of other hon. Gentlemen on both sides of the House who wish to make speeches. If there is one hon. Gentleman who would have to wait a very long time before I gave way to him, it would have to be the hon. Gentleman for Islington, North (Mr. Corbyn), with his interest in the IRA. Anyone who, like me, has served in the Northern Ireland Office would, like me, treat the hon. Gentleman's attitude with contempt.

Mr. Frank Dobson: The hon. Gentleman is windy.

Mr. Patten: "Windy" describes all too well the hon. Member for wherever it is that the tube stations are located—Holborn and St. Pancras (Mr. Dobson).
The hon. Member for Ross, Cromarty and Skye made great play of the impact that funding these awards will have on health authorities.
We need to pause and get the funding of the pay awards into perspective. For example, health authorities in England will receive some £9·5 billion in revenue funding from the Government this year. This includes a cash increase of over £500 million for 1985–86. Scottish health boards received £1·35 billion, a cash increase of some £70 million. Health authorities have also told us that they plan to realise about £150 million extra this year through their growing programme of cost improvements—something largely ignored by the hon. Member for Ross, Cromarty and Skye. In Scotland, health boards are doing the same, including the health board that is chaired by the hon. Gentleman's former headmaster.

Mr. Kennedy: rose——

Mr. Patten: I did not intervene in the hon. Gentleman's speech but I shall give way once more, in recognition of the hon. Gentleman's important Front Bench position.

Mr. Kennedy: Will the Minister confirm or deny my argument, based on the Government's White Paper and applying the Government's Treasury GDP deflator technique, that last year there was a 0·1 per cent. reduction in output, and this year this has been increased threefold to 0·3 per cent.?

Mr. Patten: One has to look at figures that demonstrate the economic cost of the services being provided.
In the face of the formidable additional sums which have gone into the National Health Service, linked to the equally formidable sums of cost improvement, both south

and north of the Border, it is completely misleading to suggest that the pay rises of nurses and doctors can only be met at the expense of patient services. It is obvious that decisions like this, taken during the course of the year, sometimes require the revision of short-term plans, but flexibility like this always has and always will be a characteristic of NHS planning. The vast majority of authorities recognise this and will cope more than adequately with the pay bill costs that they face this year.
I was surprised that the hon. Member for Ross, Cromarty and Skye indulged in speculation about the prospects for 1986–87 and future expenditure years. It does the NHS no good if, far from talking about the current or the past position, people indulge in highly speculative and morale-damaging allegations about the future, and I do not propose to join the hon. Gentleman. The effect of the staged awards on next year's pay costs will be taken into account in the public expenditure review. I hope that those who are making alarmist statements about problems that they imagine will arise next year will take note.
I reject the hon. Gentleman's strictures. My right hon. and learned Friend the Minister for Health and I stand by the Government's record. I am convinced that the Government's treatment of this year's award represents a highly satisfactory outcome, which is fair to nurses, taxpayers, the NHS and NHS patients. I believe that, together, the review body that we set up in 1983, our increased spending on the NHS and its better management is enabling us to begin to solve sensibly the difficult and complex problem of settling the pay of nurses. This is essential to the united aim of the Government and the NHS to improve the service that we provide for patients. Nurses and doctors have a critical role to play in achieving that aim.
I am slightly confused about the health policy of the Social Democratic party and about how it hopes to help more patients. Is the SDP's health policy the same as the Liberal party's health policy? If not, how does it differ from the Liberal party's policy? We may be told by the hon. Member for Leeds, West (Mr. Meadowcroft) when he winds up the debate. I understand that a little later tonight those hon. Members who want to do so can hear him play the clarinet in the Liberal jazz band. It will be interesting to see whether he and his SDP friends play the same tune about health care.
Every time we look at the policies of the Social Democratic party and the Liberal party we see very wide gaps between them. Is the gap on health as wide between the Liberal party and the Social Democratic party as it is between the unilaterialism of the Liberal party defence policy and the nuclear deterrence defence policy of the SDP?

Dr. Brian Mawhinney (Peterborough): Does my hon. Friend agree that it will be interesting to see whether the spokesman for the Liberal party mentions patients in his speech, and in particular whether he is able to bring himself to appreciate the substantial increase in the number of outpatients, inpatients and day case patients who are now being treated by the NHS? It will be interesting to see whether he welcomes that increase or whether he denies its existence, which was the theme of the spokesman for the Social Democratic party.

Mr. Patten: My hon. Friend is characteristically right, so I am pleased that I acceded to the temptation to give


way to him. Either the hon. Member for Leeds, West must agree that more patients are being treated nationally and locally, or he must disagree with his hon. Friend the Member for Ross, Cromarty and Skye. He cannot have it both ways. The Liberal and Social Democratic parties cannot try to have it both ways in public relations but then go in two separate directions over policy, one party being in favour of unilateral disarmament, the other party being in favour of nuclear deterrence. Shall we find that the same differences exist over NHS policy as exist over economic policies, with one party liking free market economics and the other party wanting to manage everything in sight? The Liberal party opposes the use of nuclear power for providing energy, while the SDP supports it.

Mr. Deputy Speaker: That is the third occasion upon which the Under-Secretary of State has mentioned nuclear policy. It is far removed from the amendment that he is supposed to be moving.

Mr. Patten: I apologise profoundly, Mr. Deputy Speaker, for having gone down that road. I thought it was important that the general public should know about the substantial policy differences between the Social Democratic party and the Liberal party and that it should be exposed in a way that the press is all too disinclined to expose. We shall have to wait and see how big is the gap between them on health matters. However, the hon. Menber for Ross, Cromarty and Skye has made no case this afternoon which allows us to understand any more clearly his party's health policy. He made no case at all for his motion and I must invite my right hon. and hon. Friends to reject it in the Lobby.

4.56

Mr. Michael Meacher: The Opposition support the motion. It is broadly in line with our own response to the Government's handling of the pay review body's awards that were announced on 6 June. I agree with many of the points made by the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy). It is even more significant that in the reply of the Parliamentary Under-Secretary—or PUSS as I believe he is known in the trade—he played the usual gramophone record about the Government's performance but in a characteristically ungenerous speech flailed about at everything in sight and said embarrassingly little about the subject under debate, and very little indeed about the funding of the pay award for nurses.
There are three aspects to the awards about which we made strong objections at the time and about which we still object. First, there is a marked difference in the time scale for implementing the awards, which severely discriminates against nurses. The award for the armed forces was met in full and was backdated to 1 April. The award to the doctors was met in full and paid from 1 June. The award to nurses, midwives, health visitors and professions allied to medicine is, however, to be held back for 10 months.
On the nurses' pay review body the Minister, with a wonderful elasticity of language, said:
We are accepting the review body's recommended levels and we will bring them into payment in full as soon as we can.
When translated, I think that he meant: "The Government have rejected the review body's proposals for nurses and

midwives and will pay the recommended increase only for the final two months." For almost the entire year, nurses will receive, at most, 5 per cent. This will leave them below the rate of inflation and will do nothing to eliminate low pay among unqualified nurses who are living on the poverty line.
The Opposition's second objection is that, compared with last year, the funding arrangements represent, by any standard, a major tightening of the screw on the National Health Service. In the year before last, the Government covered 100 per cent. of the pay award to nurses out of central funds. They were quite right to do so, and we would do the same. Last year, the Government covered £180 million only out of the £216 million award to nurses and related groups, which is 83 per cent. This year they are covering only 33 per cent. That is a measure of the sharpening pressure on NHS budgets during the last two years.
Our third objection is that the whole exercise has involved the declaration of a pay norm that the Government know to be completely unrealistic as a way of camouflaging the imposition of further cuts. To that extent I agree with the hon. Member for Ross, Cromarty and Skye, who referred to making cuts by stealth.
The Minister has denied that he set a 3 per cent. pay ceiling at any time. But it is clear from reading the document that both the permanent secretary, Sir Kenneth Stowe, and the chairman of the NHS management supervisory board, Mr. Victor Paige, told the Select Committee on Social Services that the pay assumption was 3 per cent. If the Minister doubts that, I suggest he reads the record. The Government know perfectly well that a 3 per cent. limit can never be met while inflation is running at 7 per cent. and pay settlements generally at something between 7 per cent. and 8 per cent. It was simply a device to offload most of the onus for meeting the pay claim on to the health authorities, and the Government knew it must lead either to cuts in nurses' jobs or to cuts in services to patients. Either way, that is moral blackmail.
The Minister chose to disregard these criticisms in the bland statement he issued at the National Association of Health Authorities conference in Cardiff last month. That cannot have been one of his most enjoyable visits. At that conference he said he was
'singularly unimpressed' by any English health authority which said the nurses' settlement would have any impact on its budgeting plans.
He went so far as to say:
I must greet with disbelief any authority saying it cannot afford the full cost of the nurses' pay award.
I have news for the Minister. The disbelief is all on the side of the health authorities, who view such a dismissive statement from the Minister as either supremely arrogant or astonishingly naive. A great many health authorities believe that the nurses' pay award cannot be met without substantial cuts. It is not difficult to see why.

Sir Nicholas Bonsor: Will the hon. Gentleman give way?

Mr. Meacher: No, not until I finish this section. I will say why we believe that that crucial point is the case. In a year when the total cash increase for hospital and community health services in England was £521 million—that is the Government figure—this pay award alone will cost health authorities £240 million. Even those health authorities which receive additional cash to help them cope


with demographic pressures will find that this money is needed to fund pay awards, and savings obtained from cost improvement programmes will have to be diverted from new developments, for which they are intended, to compensate for this.
That is because this year's pay award to nurses and doctors can be accommodated—this is the crucial point Ministers have to answer—within health authority budgets only if prices rise by only 5 per cent.—as everyone knows, they are currently running at 7 per cent.—and only if pay to other Health Service groups does not exceed 3 per cent. Ministers and possibly other hon. Members know that a pay increase to other Health Service workers of 4·7 per cent. has been rejected. The Government's only refuge is to talk, as the Minister has done many times and as his hon. Friend did today, about efficiency savings. But in this world, one does not get owt for nowt, as they say in Lancashire.
So-called efficiency savings, which is a euphemism if ever there was one, are bought at a price, and are often achieved only at the expense of reduced maintenance and repair work or through land sales or the postponement of new projects. That is not a saving at all. It is simply an uneconomic deferment of today's problems until tomorrow when they will be solved often at higher cost. The cost of the Government's foolish policy, not the savings, was pinpointed recently by the Audit Commission. Its report drew attention to the fact that completing the backlog of repairs to hospitals would cost £1,700 million. That is some efficiency saving, if it is at the price of postponing those repairs even further.

Mr. John Patten: Will the hon. Gentlman give way?

Mr. Meacher: The hon. Gentleman was exceedingly rude about many Opposition Members and I feel tempted not to give way. However, as I am a little more generous than the hon. Gentleman, I will give way.

Mr. Patten: I am very grateful to the hon. Member. Does he not recognise that one of the reasons that the backlog, both in the capital programme and in building maintenance in the National Health Service, grew so much in the late 1970s was the savage 30 per cent. cuts in the NHS capital account that the last Labour Government set in train?

Mr. Meacher: The hon. Gentleman's attempt to defend the Government would be much more plausible if the Government's current spending on investment in the Health Service was up to the level achieved by the last Labour Government. When the Government can achieve that performance, they might have some case.
The Government's excuse about efficiency savings needs to be met once and for all. It resolves itself into two options: either maintenance or repair work or new projects needed now are postponed, in which case the eventual cost to the NHS will be substantially higher and efficiency savings can be seen as merely storing up bigger trouble for tomorrow; or this needed work is carried out now, as it should be, in which case there will have to be other cuts in the Health Service to meet these pay awards. Either way, it must surely be clear to everyone in the House that a sizeable funding gap cannot be filled by glibly trotting out phrases like "efficiency savings".
Exactly the same conclusion was reached by the Select Committee on Social Services in its sixth report. published on 12 June. In a carefully argued passage in paragraph 13 the Committee says:
the additional pay costs in 1985–86 for cash-limited NHS services would be 5·4 per cent for doctors and 5·6 per cent. for nurses. The Department is unable to give a sensible estimate at this stage for an HCHS pay and prices factor, because of the outstanding pay settlement for other NHS staff.
I understand that. The report continues:
It is highly unlikely that inflation in the HCHS will be under 5 per cent. If it were to be 6 per cent, that would leave an input volume figure of—0·2 per cent, similar to 1984–85.
Leaving aside the jargon, that means a cut, and on the most careful analysis, the Select Committee on Social Services, on which Conservative Members have a majority, arrived at the conclusion that, based on the likely level of this year's inflation, there will be cuts in services. That is the report to the House of the Select Committee on Social Services and its analysis of the evidence. The report makes it clear that, far from there being any growth in the NHS services this year, following these pay awards there will almost certainly be cuts.

Mr. Kenneth Clarke: I always regret, almost as soon as I get up, arguing against the hon. Gentleman's tortuous use of figures. He will admit that the passage he has read is about measuring spending in the Health Service in relation to pay and price movements. It says that "if" the pay and prices factor inside the NHS were to reach 6 per cent. then there would be a reduction.

Mr. Dobson: That is what my hon. Friend is saying.

Mr. Clarke: The hon. Gentleman is either not listening or not understanding. We are talking about 1985–86. The nurses' award is 5·6 per cent., but we do not have a settlement for the other staff. An amazing settlement for the other staff would be required to take it up to 6 per cent. on that basis alone. The hon. Gentleman is being alarmist by taking an inflated view of the likely level of inflation for the whole year, which he thinks is going to come to 7 per cent. That is the highest estimate that I have ever heard. That has been driven up anyway by mortgage interest, which is not, to my knowledge, paid by health authorities. Even the month-to-month figures have been driven up by factors which health authorities do not meet. The hon. Gentleman has also overlooked the effect of the reduction of national insurance contributions in this year's Budget. Those are paid by health authorities on the great bulk of their staff.
For all those reasons, will the hon. Gentleman admit that once again he is going through the evidence of a Select Committee desperately trying to put together unlikely figures to turn £500 million of increased cash limits into an alleged and fictitious cut?

Mr. Meacher: The Minister is getting very worried at my simply repeating what the Social Services Committee said. If he disagrees with the Committee, perhaps he will give us his estimate of the likely pay and prices factor for this year. If he disagrees with 5 or 6 per cent., I will give way so that he can give us his estimate of what he thinks it will be.

Mr. Kenneth Clarke: The hon. Gentleman forgets that a moment ago he said that it was fair for us to say that we could not give an estimate because we had not yet settled. Therefore, will the hon. Gentleman stop basing fatuous cases on hypothetical assumptions?

Mr. Meacher: The other way of putting it is that the Minister cannot deny that there may be a pay and prices factor this year which will lead to cuts in the NHS.
What worries health authorities most is the fact that the situation could become much more serious next year. They are having to meet two thirds of the 9 per cent. nurses' pay award from February next year, and if a similarly large proportion of next year's pay award were left unfunded by the Government—given the trend of the past two years, that is extremely likely—health authorities could find themselves forced to make far bigger cuts than anything yet contemplated.
I shall give the Minister several examples, which he will be pleased to hear are not anecdotes. I have been in touch with several health authorities about how they propose to fund next year's pay award. In West Lambeth—[HON. MEMBERS: "Ah!"] West Lambeth is a significant health authority. The Minister wishes to sack the members because of their unwillingness to carry through cuts which will amount to £80 million by 1993. The West Lambeth treasurer tells me that, as a result of the authority having to fund most of the pay award, there will be a shortfall of £450,000 this year and of £1 million next year.
The health authority already has to cut—1 million from next year's budget—the Minister wishes it to do that—in addition to suffering a cut of a further £1 million in RAWP money, making a loss of £3 million by 1986–87. The authority told me:
Inevitably, there will be cuts in services to patients
either in acute beds or in putting a stop to community development.

Sir Nicholas Bonsor: Will the hon. Gentleman give way?

Mr. Meacher: No.
Salford said that the fact that it is being required to fund most of the nurses' pay award will produce a shortfall in finance for health services of £360,000 this year and £ 1 million next year. It does not have a development fund and gets money from the region only for specific programmes.
The Salford authority says that it has cut everything possible over the past few years, and all that is left to be cut are services to patients.

Sir Nicholas Bonsor: Rubbish.

Mr. Meacher: The hon. Gentleman knows nothing about Salford. His intervention demonstrates either arrogance or absurd pretentiousness.

Sir Nicholas Bonsor: Will the hon. Gentleman give way?

Mr. Meacher: No.
As a result of having to fund most of the pay award, the Brighton health authority will have to make cuts of £500,000 this year and £1·3 million to £1·5 million next year. I have with me Brighton's document "Impact of Pay Review Body Awards and Increased Rate of Price Inflation on the Finances of the Authority", which makes it clear that the authority is planning cuts from among 60 items. They include taking all or most services from Hove and Lewes hospitals, not replacing consultants when they retire, employing trainee nurses rather than trained staff in GP surgeries, abolishing the ambulance bus service for the sick and frail, reducing nursing cover on night duties, reducing cleaning standards in staff accommodation,

charging low-paid NHS staff more for meals, cutting staffing levels on long-stay wards, reducing training spending, reducing fire precaution levels, reducing the quality of services in the control sterile supplies department and reducing family planning and dentistry services. [Interruption.] Here is the report; if the Minister does not believe me, he can read it for himself.

Mr. Kenneth Clarke: Having listened to that list, all I can say is that they must be paying their nurses a fortune in Brighton.
Does the hon. Gentleman accept that the two authorities that he has quoted—West Lambeth and Salford—are both overspending authorities and that the changes that they are having to make are to get back within planned budgets? The previous Labour Government insisted on that policy. Whatever arguments we may have about the overspending that has happened in Salford and is planned in Lambeth, all Governments have insisted that health authorities live within cash limits, and neither case has much to do with the nurses' pay claim.
How can all those cuts be necessary in Brighton when the pay award to nurses is costing only 5·6 per cent. this year? Does not the hon. Gentleman accept that all this is based on a hypothetical assumption about next year's PESC settlement and next year's cash limits? None of the health authorities, any more than the Government and the Opposition, can have firm figures. We have not even started speaking to the Chief Secretary yet. I do not know the figures, never mind Brighton knowing them.

Mr. Meacher: The Minister must get out of the doublespeak in which he indulges so readily when he talks about overspending. Underfunding is causing all the difficulties. It is not a case of authorities overspending and having to be brought back within budgets. The Minister is imposing intolerable strains on health authorities that are trying to provide a decent standard of service for patients.
My final quotation comes from the Lewisham and North Southwark health authority. In a letter to the Secretary of State dated 26 June, the authority said:
This Health Authority … views with disdain this Government's repeated abdication from its responsibilities to fund fully pay awards to which it is a willing party. In not funding fully such pay awards, this Government is displaying a cavalier and uncaring attitude towards our staff and those people with whose health-care we are entrusted. Should this Government claim that those monies voted by Parliament are sufficient to cover any underfunding of pay awards, then we can only conclude that this Government has no understanding, by design or otherwise, of the parlous and precarious state of NHS provision in this inner London Health District attributable directly to this Government's attitude to Public Spending.
That comes from a Tory-dominated health authority.

Mr. Simon Hughes: Will the hon. Gentleman give way?

Mr. Meacher: No. I know that the health authority is in the hon. Gentleman's constituency, but I must get on.
Like so many health authorities, Lewisham and North Southwark has a majority of known Tory supporters. Its letter shows how exasperated health authorities, even Tory authorities, are becoming at the Government's high-handedness in forcing major cuts, especially next year, which cannot be absorbed, whatever productivity improvements are made and however much the Minister juggles the figures, without significant cuts in patient care.
If the Minister cannot or will not see that fact, it is high time that he took the telescope from his blind eye and started looking directly at the facts and at what health authorities are telling him.
The heart of the debate is the central question of NHS funding. I cannot repeat too often or too strongly that there is no way that an adequate health service can be provided on a budget that is unchanged as a proportion of GDP or, even worse, on a budget that represents a declining share of GDP over the next few years, as the Government's public expenditure White Paper suggests is proposed.

Sir Nicholas Bonsor: Will the hon. Gentleman give way?

Mr. Meacher: No.
Under this Government, Britain is the lowest spender on health services in the western world. We spend only 5·7 per cent. of our GNP on health, compared with 8 per cent. in France and Germany, 9·5 per cent. in the United States and 10 per cent. in Sweden. Those are enormous differences between countries. We are not just marginally lower than our competitors; we are substantially lower.
The Government seek to force health authorities to fund most of the pay award to doctors and nurses and to force them, without extra Government funds, to cope with major new and pressing requirements, which are not the Government's fault, but have arisen in recent times—such as community care provision, countering AIDS, cervical screening, containing the spread of hard drugs and countering further outbreaks of Legionnaire's disease. That is impossible within an NHS budget that is declining as a share of overall national resources.
That is why the Government stand condemned and why no amount of special pleading about cost improvement programmes or so-called efficiency savings can insulate the Government from the stark reality that they are trying to force on to health authorities the onus which falls squarely on the Government for failing to fund the National Health Service properly.

Sir Nicholas Bonsor: Will the hon. Gentleman now give way?

Mr. Meacher: No.

Sir Nicholas Bonsor: rose——

Mr. Deputy Speaker: Order. The hon. Member for Upminster (Sir N. Bonsor) must resume his seat.

Mr. Meacher: It is not that health authorities are guilty of overspending. It is that the Government are guilty of underfunding. Until the Government reconsider that position and the increasingly intolerable consequences on the ground in terms of patient care, the Opposition will be supporting the motion.

Mr. Richard Livsey: I hope that the House will excuse my by-election voice, which is compounded by a heavy cold.
First, I pay tribute to the late hon. Member for Brecon and Radnor, Mr. Tom Hooson. He was an excellent constituency Member and has been taken from us at an early age. He was dedicated to the people of Brecon and Radnor and served them well. I am sure that the House will wish to join me in remembering his good work and in extending great sympathy to his family. [HON. MEMBERS: "Hear, hear."]
The people of Brecon and Radnor have entrusted to me the great privilege of representing them here in Parliament. This I shall do to the best of my ability. You, Mr. Deputy Speaker, will know that I was brought up amongst them and therefore feel well qualified to communicate with them and they with me, so that our voice can be heard here at Westminster.
Without doubt, Brecon and Radnor is the finest constituency in Britain. Its beauty is unsurpassed in all of Wales, and the great quality of its people was recognised by the huge numbers of people of all political persuasions who visited us during the recent by-election. In fact I see many familiar faces on the Government Benches, and I am told that no fewer than 150 members of the official Opposition visited us. I also saw them in the highways and byways of my great constituency, some in Brecon, some in Llandrindod Wells, others in Knighton and Ystradgynlais, and some, too, were even lost.
Brecon and Radnor is a series of communities, many of which are very small. The result is that the people are great individualists and rightly expect a lot from their Member of Parliament—hence my voice at the moment—and from their Government.
The people of Rhayader will not tolerate being ignored or their efficient Vickers factory being under threat as a result of the privatisation of British Shipbuilders. Builth Wells was up in arms about the Audit Commission's thoughts on denying it a new school. Brecon would not suffer the closure of St. David's hospital, nor would Crickhowell tolerate the closure of Cwrt y Gollen camp. Ystradgynlais and its people have seen levels of unemployment in excess of 18 per cent. for far too long.
The by-election was fought and won largely on the issue of cuts in public expenditure. These are policies being implemented by the Government and they have been found wanting by the people of Brecon and Radnor. Opposition to these cuts was focused on education and other local government expenditure, farming and especially the National Health Service.
I was brought up in Talgarth, a town which is almost entirely dependent on National Health Service employment. The NHS employs 2,100 people in the constituency. There were many problems identified during the by-election campaign, but the future for the NHS in Brecon and Radnor is grim.
Government cash limits throughout Powys area health authority allow a 3 per cent. increase in 1985–86, yet the nurses are to receive a 9 per cent. award, well deserved but not exceptional taking into account that it covers a two-year period.
According to the chief executive of Powys area health authority, the net effect is a deficit of 5·4 per cent. on the area health authority budget for 1985–86 not catered for by the 3 per cent. increase in cash limits. The knock-on effect for the authority is to have to find £700,000 in the current year to finance pay awards from within its own resources—this in a budget of £21·496 million. The latest presumption is that a further £1·3 million will have to be found in 1986–87.
I draw attention to the fact that 78 per cent. of the area health authority's expenditure in Powys goes on salaries. If this is related to the 1986–87 figures it will, taking account of Powys area health authority's average employer's cost of £8,000 per employee, result in a possible loss of 126 jobs within the authority.
If losses in Government revenue from redundancy payments, national insurance and tax losses, and VAT are taken into account, the so-called saving of £1·3 million will cost the Government £1·89 million in lost revenue and at the same time inflict great hardship on the people of Brecon and Radnor.
These figures imply that a £1 restriction in cash limits has a consequent loss of revenue of £1·45 in the first year—in other words, a net loss of 45p. This is surely the economics of despair.
These matters also cast suspicion on the Government's claim nationally of a 20 per cent. real growth in National Health Service funding since 1979. There was a 30 per cent. increase in nursing staff salaries in May 1979, and there has been a reduction of two and a half hours per week worked by nurses since 1980. If this is coupled with a 2·5 million increase in out-patients since 1980, a 650,000 increase in in-patients and 300,000 more day patients in the same period, Health Service output has increased significantly.
These factors must surely be taken into account in future policy decisions about the National Health Service. The service requires adequate funding and a built-in allowance for an increasing aging population. This is a particular problem in my constituency and featured very strongly in the by-election campaign.
Brecon and Radnor is a fine constituency traversed by the valleys of the rivers Usk and Wye. It is farmed supremely well, whether in the uplands of Radnorshire or in the Brecon Beacons, and in the great traditions of its livestock farming. The rewards of honest endeavour at present are declining farm incomes. These good people of Brecon and Radnor, whether in the hamlets, villages or towns such as those of Sennybridge, Llanwrtyd, Presteigne and even "independent" Hay-on-Wye, all need a better future.
Our small businesses and communities must be allowed to thrive. Nor should we forget the immense job that needs doing for the area of Ystradgynlais and its fine people. The Government must provide us with the means to get aid from the European social fund. The need is quite clear. All that is required is the will power to provide it.
I dedicated myself to Wales, my constituency and its people—to work constructively for them all. Will the Government of the day take their cue from the verdict of the people of Brecon and Radnor and work for them, too?

Mr. David Heathcoat-Amory: It is my pleasure to be called immediately after the new and hon. Member for Brecon and Radnor (Mr. Livsey) and to welcome him to the House.
I speak for all right hon. and hon. Members when I say that the House will appreciate his generous tribute to his predecessor, who was a brave and much-respected Member and who sat on the Government Benches. He practised what many Liberals preach by way of community politics, and I hope that the hon. Gentleman will serve his constituency as well as his predecessor did.
The hon. Gentleman has started well. His speech was responsible and constructive. I hope that his tenure of Brecon and Radnor will be glorious, even though it will necessarily be brief.
A general feature of health services everywhere is that there is no natural level of expenditure and no level of expenditure that satisfies the requirements put on it. Expenditure can increase practically without limit. That is partly because demand is increasing. For example, we have an aging population, and the number of old and very old people will increase dramatically by the end of the century.
I pay tribute to the private sector for looking after large numbers of elderly people in nursing and residential homes. About 30,000 people are looked after in nursing homes. That is often done more economically than would be possible in the public sector or in geriatric hospitals. I urge Labour Members to think long and hard before they dismiss the private sector in that respect. Where would those people go if the Labour party carried out its threat and shut down or restricted the entire private sector?
Demand for health care is increasing for other reasons. We are now better at diagnosing diseases and there is an almost inexhaustible supply of new technology in the health sphere. The effect of the new technology is perverse. In industry, the introduction of new technology usually leads to savings in manpower—at any rate in the short term—to a reduction in unit costs and to lower revenue expenditure. A new piece of equipment in a hospital can have the opposite effect. It tends to increase demand. Expenditure rises and often new staff are required to service and look after it.
The advance of medical science is almost without limit. That is welcome because it means that previously incurable illnesses can be treated. It also means, however, that treatments costing a few hundred pounds last year can he replaced by new treatments costing a few thousand pounds this year. It will always be difficult to accommodate such increases in expenditure in a budget which, in overall terms, can increase by only a few percentage points annually.
If medical need is to be the sole criteria, there will be no limit to the scale of expenditure, because, if any human being anywhere is receiving a more advanced type of treatment, it will be open to people to demand that treatment, and patients and doctors will say that they need it, that the NHS should supply it and that the Government should pay for it.
There is no escaping the fact that there is no level of expenditure or increase which will ever meet medical demand in its entirely. That is why, in the real world, choices must be made and priorities set. There will always be allegations that some treatment is being denied one or other group of patients. That fact must be faced by any party in office, and that is why I have been disappointed by the speeches made so far by Opposition Members. They have not addressed themselves to the central facts of expenditure in relation to health care.
Labour Members should think carefully about their policy of ending private medicine. I have spoken of that in relation to the care of the elderly. How could the NHS cope with the additional patients if the private sector were shut down? How could it manage without that revenue and still have resources over to increase expenditure in the ways in which Opposition spokesmen promise?

Dame Jill Knight: I urge my hon. Friend to pay tribute also to the way in which the private sector makes available pieces of equipment which the NHS would find it difficult to buy.

Mr. Heathcoat-Amory: I am grateful to my hon. Friend for making that important point. It is a partnership between the private and public sectors. That, under the present Administration, is enabling many patients to receive advanced medical care which would otherwise not be available to them.
Nor should Opposition Members be so dismissive of the internal economies and efficiency savings that have been achieved and the scope for funding at least part of the nurses' and doctors' wage award out of further economies. The hon. Member for Oldham, West (Mr. Meacher) seemed almost to say that economies were impossible. 1 put that down to his lack of business or any other practical experience. He can take it from me that it is possible in any undertaking to increase output while holding costs.

Mr. Michael Meadowcroft: Will the hon. Gentleman accept that the amount of expenditure that is not represented by staff costs in the NHS amounts to about 25 per cent.? Thus, the savings that can be made in percentage terms bear more heavily on that component than on staff costs. If, however, savings are made at the expense of staff, what happens to those who are made unemployed? Presumably the net cost would not be great enough to warrant the redundancies that might be thought worth while if the policies that he is advocating were taken to their logical conclusion because the low-paid, being almost invariably those who are made redundant. cost almost as much to keep unemployed.

Mr. Heathcoat-Amory: I shall come to the question of the balance of staff and other costs later in my speech. The answer to the rest of that intervention is that the hon. Gentleman's argument is a case for making no economic change at any time. If his argument is generalised, everyone must stay in his or her existing job from now until the end of time.
I hope that Opposition Members are not so naive in relation to efficiency savings to imagine that only recorded and published savings give the full picture. It is of benefit to have in-house services and the knowledge that performance can be assessed against some external yardstick. Those concerned then know that their ultimate job security depends on their performance and the performance of the units in which they work. That feeling is familiar to anyone working in industry, but it has not been sufficiently prominent up to now in the NHS.
Naturally, people prefer a quiet life. Few organisations ever reform themselves. That is why the Government must keep the pressure on. It is no criticism of existing NHS managements to say that there must be areas of waste, overlap and duplication still to be found and corrected. With almost 1 million people employed in the NHS, it is fantastic to allege that no further economies can be made. Of course they can, and it is no disrespect to the administrators at present in the health service to say that. Above all, let us end the obsession with how much money we are putting into the NHS and concentrate instead on how that money can be turned into patient care for the maximum number of people.

Mr. John Patten: I am interested in my hon. Friend's remarks about the level of NHS expenditure. Does he agree that we should not compare carelessly or easily the amount of the gross domestic product spent in this country on health care with that of other countries? We should relate that expenditure to the quality of health care that is

given. Does he agree, for example, that it is extraordinary for the NHS to be spending at the present level of GDP and to be achieving lower perinatal mortality and higher life expectancy rates than are being achieved in the United States?

Mr. Heathcoat-Amory: It is an achievement of the Government that they have not only provided more resources for the Health Service, but have made them go further.
I was disappointed with the speech of the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy). which was all about cash and resources. He said almost nothing about patients and patient care and the performance of the NHS.
I do not wish to get into the statistical quagmire with the hon. Member for Oldham, West. He was obviously confused by the figures and failed to present a convincing case using them. The overall expenditure increase of 17 per cent. in real terms during the past six years gives the lie to the allegation that the Government are relentlessly cutting or dismantling the NHS. My hon. Friend the Minister gave a detailed breakdown of the figures, and they will no doubt be referred to again.
The hon. Member for Birkenhead (Mr. Field), who is not currently in the Chamber but who intervened earlier, said that figures were one aspect, but that there was no anecdotal evidence from Conservative Members that health care was increasing and improving on the ground. I can help the hon. Gentleman with that. The people at the western end of my constituency will soon have the benefit of a new, large, modern hospital at Weston-Super-Mare. During the past six years capital expenditure has increased substantially more than it did during the previous six years. The treatment of the mentally ill and mentally handicapped in Somerset is undergoing a process of structural change and reform. That will not save money, but it will improve care. The change will involve the closure of a number of large hospitals, including the Mendip hospital in Wells, and the transfer of patients to smaller satellite units, community residential units and day care units.
That change is controversial in many respects and some people think that the trend towards community care for the mentally ill has gone too far—and I am inclined to agree with them. The new structure will not save money; indeed, the budgeted costs will be somewhat higher than at present. The emphasis is on improvements in care. The increased costs—which will be modest, but nevertheless will occur—have been agreed with this so-called uncaring Government.

Mr. Kennedy: I suspect that the hon. Gentleman did not deliberately misrepresent what I said. He is describing what is happening in his local area, and I am listening to him with care. Can he tell us how much direct benefit will accrue to his area as a result of the health authorities having to meet the cost of the nurses' pay award?

Mr. Heathcoat-Amory: My regional and district health authorities are perfectly confident that they can proceed with budgeted plans on capital and revenue expenditure and meet the nurses' pay award.
Reference has been made to inflation in the NHS being faster than the general index of prices. It has been alleged that, therefore, spending increases have not really taken place. The reason for a faster rate of inflation in the NHS is precisely because wage costs and wage awards have


risen faster than the retail prices index. Nurses' pay rates have risen by 23 per cent. during the past six years, but, even after taking account of that price deflator, it is still true to say that there has been a substantial volume increase in NHS expenditure during the past six years. Nothing that Opposition Members may say, either inside or outside the House, can alter that fact.
Opposition Members appear to be saying—and it is reflected in the motion before us—that we should have two NHS budgets: one for pay and one for general expenditure, and both of them elastic. I do not think that that is a sensible way to run the NHS. No commercial organisation can regard its wages bill as separate, to be topped up by an outside body from time to time. Indeed, it would be quite wrong and damaging for future negotiations if the Government stepped in in that way this year. If that happened, the review body and the Health Service negotiators would know that they were not working within a strict financial framework, but that their recommendations, negotiations and settlements could always be funded by some additional levy on the taxpayer. That is an old, familiar story of nationalised industry. We have been trying to move away from that way of settling our affairs. Let us not re-import it into this year's—or any year's—negotiations.
If anything, I believe that this year's award highlights the problem of having an independent review body. I appreciate that it is convenient for Ministers to have such a body, and I pay tribute to its work in juggling some of the gradings within the NHS. But, by and large, it is better if those who pay the piper also negotiate with the piper.
It would have been better if the alliance had faced that issue rather than, as usual, following the path of least resistance and calling for more public expenditure. The alliance has a long way to go, based on today's debate, before it can pose as a credible party of government.

Mr. Willie W. Hamilton: The hon. Member for Wells (Mr. Heathcoat-Amory) said that the debate was about priorities, and to that extent I agree with him. Every Government must decide how much they allocate to health, defence, education and so on. Everyone who listens to or reads the debate must know that the NHS is in a shambles. It is being ruined day by day. That is why we are supporting the motion tonight.
I congratulate the hon. Member for Brecon and Radnor (Mr. Livsey) on his speech, especially for its brevity, clarity and the unequivocal statement that he won his seat because of the Government's neglect of the NHS in that area. Other hon. Members throughout the country know that to be true.
The Government themselves, when they prepared their paper for the National Economic Development Office, provided figures showing that £1,700 million would be required to renovate and maintain our existing hospitals. The Government even said that that figure might be wrong because it included estimates for repairs to hospitals that should be demolished. That is the state of our National Health Service today.
The Government's amendment congratulates them on
implementing the recommendations of the Health Service Pay Review Bodies".

Quite frankly, that is a lie. If I am called to order. I shall say that it is a deliberate distortion of the truth. They are not implementing the proposals of the review body, which said that the award should be paid in full and backdated to April. The Government are making an award of 5·6 per cent. now, but the nurses will have to wait until next February for the rest. In other words, it is jam tomorrow. Meanwhile, some of the nurses have to make do with less than 5 per cent. while prices are increasing by 7 per cent.
The Government are saying to the nurses, "You are wonderful people and because you are so dedicated we shall cut your standard of living." That is what the figures mean. A 5 per cent. increase in salary and a 7 per cent. increase in prices results in a 2 per cent. reduction in a nurse's standard of living. However the figures are dressed up, they mean a cut in the standard of living for tens of thousands of nurses.
Pupil nurses and first and second-year student nurses will have an increase of 4·7 per cent. or 4·8 per cent. up to next February. Hon. Members may argue that student nurses are training for qualifications, but we are talking about cheap, exploited labour. Even with the increase, those kids will receive only £80 a week gross.
The Nursing Mirror carried an article the other day about student nurses. It warned:
Staff shortages are putting patients' lives in danger by leaving student nurses alone in charge of wards.
That is being said not by the Labour party but by the Royal College of Nursing. The article continues:
A survey of 1,000 nurses showed that 31 per cent. of student nurses were often left in charge of wards, usually at night. Another 61 per cent. had occasionally been left alone. Staff shortages are blamed. Nearly 90 per cent. of qualified nurses in the survey said that they had warned hospital authorities that staff levels were dangerously low. Young students were being left to cope with acutely ill and dying patients.
That is said by the Royal College of Nursing Students Association head, Miss Sandra Mills. That is what is happening in the real Health Service.
The Minister behaved like a juvenile delinquent when he adopted his sneering manner today. He treated everyone who dared to criticise as either ignorant or malicious. We know from our surgeries throughout the country that we are talking about the real Health Service.
In their amendment the Government preen themselves on the
particularly high awards for staff nurses and ward sisters". 
Of course the £6,000 starting point for newly qualified staff nurses is good, but only because the salary has been so inadequate. The staff nurse is the key nurse in any hospital. The maximum pay for a staff nurse in 1982–83 was £7,008. In 1983–84 it was £7,569. I obtained the figures in answer to a written question on 10 July last year.
The hon. Member for Wells (Mr. Heathcoat-Amory) talked about priorities and how we pay different rates for different services. In 1982–83 an untrained, unqualified police constable was paid a maximum of £9,798. By 1 September 1984 his maximum pay had risen to £11,193—about £3,600 more than the maximum for a fully qualified and fully trained staff nurse in our hospitals. Does anybody in the country or in the Government dare to say that a fully qualified staff nurse is not worth as much as a police constable?
Government Members say that throwing money at the problem is no good, but that is exactly what they have done with the police. There is no talk of cash limits for them.

Mr. Kenneth Hind: Will the hon. Gentleman give way?

Mr. Hamilton: No. The hon. Gentleman has only just arrived. I want to make my case and then sit down.
I say good luck to the police. In 1980 the police had an increase of 21·3 per cent. In 1981 they received another 13·2 per cent., in 1982 a further 10·3 per cent., in 1983 another 8·4 per cent. and in 1984–85 a further 5·1 per cent. Let us compare those figures with the figures that apply to nurses, who this year receive a miserable 5 per cent. it is not worth tuppence. The Government are throwing money like confetti at the police and armed forces when the nurses have to wait.

Mr. Hind: Will the hon. Gentleman give way?

Mr. Hamilton: No.

Mr. Hind: rose——

Mr. Deputy Speaker: Order. The hon. Member is not giving way.

Mr. Hamilton: The hon. Member for Lanarkshire, West (Mr. Hind) has only just come into the Chamber. He wants to intervene only to prove to his constituents that he has taken part in the debate.
The Minister did not mention waiting lists. Since the Government came to office there has been an increase of 15 per cent. in the number of people on waiting lists.—[Interruption] I see that the Minister is impatient to intervene. He has given me figures about waiting lists for Scotland. In March 1980, a total of 69,904 people were on the waiting lists in Scotland. In March 1984, 85,364 people were on the waiting lists. The provisional figure for March 1984 was 83,061—an increase of over 18 per cent. That is the measure of how the Health Service is failing the people.

Mr. John McKay: The reason for the increase is the dispute in the National Health Service which the hon. Gentleman supported day after day, despite the damage that it was doing.

Mr. Hamilton: I thought that the Minister would say that. The figures up to that date were not down. I challenge the Minister to say whether he is claiming that over the next two years the waiting lists in Scotland and in the United Kingdom as a whole will be reduced. If he is not prepared to say that, it is a measure of how the Government are failing the people of Scotland and the United Kingdom.

Mr. Hind: Give way.

Mr. Hamilton: No. The hon. Gentleman must contain himself. The Government talk about priorities——

Mr. Hind: Give way.

Mr. Hamilton: No.
The Government talk about shortage of money. If there is a shortage of resources in the Health Service they should explain why they are spending £2,000 million over the next three years on 1,200 folk in the Falkland Islands. They can find money for that. Members of the Labour party should go on repeating that because it is indefensible and a waste of public money. That £2,000 million would be far better spent on the Health Service, for the good of the 56 million people in Britain, rather than being poured down the drain for 1,200 people 8,000 miles away

Mr. Jerry Hayes: There is always a whiff of unreality and almost a whiff of hypocrisy when the House discusses an Opposition motion on the Health Service. There could be nothing more unreal and hypocritical than the speech that we have just heard from the hon. Member for Fife, Central (Mr. Hamilton). The hon. Gentleman comes to this House with his heart on his sleeve, telling us what this wicked Thatcher junta is doing to the Health Service and forgetting what his own Government did.
We had the privilege of listening to the hon. Member for Oldham, West (Mr. Meacher) giving his swansong as the Opposition spokesman on the Health Service. The right name for him would be "Mr. 30 per cent.", because he was a Minister at a time when the Labour Party cut capital expenditure on hospital building by about 30 per cent.
Under the Conservative Government, 35 hospital schemes in excess of £5 million each were completed between 1980 and 1984. In addition, 11,000 new beds have been provided, together with 169 new operating theatres, 105 X-ray rooms, 25 accident and emergency departments, and 22 out-patient departments.
Admittedly, the hon. Member's speech was not quite so over the top as his previous speech, and I am delighted to see that he is sweetening his words. That is understandable. With the gaffes that he is making, he can only sweeten his words, because he never knows how often he will have to eat them.

Mr. Hind: Will my hon. Friend bear in mind that the hon. Member for Fife, Central (Mr. Hamilton) ignored the fact that when the Conservative Government took office in May 1979, the NHS waiting list was 749,000? It is interesting to note that the hon. Gentleman is leaving the Chamber. Before the dispute that he supported, the waiting list had been reduced to 619,000. Even after that dispute, the waiting list is still much lower than it was when the Labour Members Government left office in 1979.

Mr. Hayes: My hon. Friend is 100 per cent. correct.
If Labour really cared about patients, the hon. Member for Oldham, West would be the first to get up and say that he wholeheartedly condemned the decision made the NUPE annual conference to abandon the TUC code of conduct about giving industrial cover for emergency services. It is important to note that Labour Members will not condemn action that they know will jeopardise the old, casualty wards, and young people.
Although there is a whiff of hypocrisy and unreality about the debate, and although I am the first to congratulate the Minister for Health and his able deputy on their success in increasing finance for the Health Service, I must draw attention to two problems that affect my district health authority.
I find it a peculiar paradox that the British Medical Association tells us that there are 700 junior doctors unemployed, and that 20 per cent. of junior doctors have experienced six months' unemployment over a two-year period, when in my authority in the past month a casualty ward has been closed in three hospitals, not through lack of resources or lack of finance. [Interruption.] Opposition Members may laugh and joke but I have spoken to the administrators of those hospitals, and they have assured


me in writing and orally that it is not due to lack of finance. The difficulty that the NHS faces is a shortage of casualty locums. Surely it is not beyond the wit——

Mr. Kirkwood: Will the hon. Gentleman give way?

Mr. Hayes: I will give way in a moment if the hon. Gentleman will be patient and let me finish the point I am making.
It is a paradox that casualty wards are being closed not through lack of finance or resources or because of the alleged cuts that Opposition Members talk about but because people on programmed leave cannot find the locums to replace them. I ask my right hon. and learned Friend to look at that paradox. Surely it is not beyond the wit of the DHSS to put right those imbalances.

Mr. Kirkwood: I shall not debate with the hon. Gentleman the point that he is making. Having introduced the debate, I simply want to ask him whether he believes that health authorities should be given additional support by the Government to meet the pay increases of nurses, midwives and other sectors of the Health Service which have been recommended by the pay review bodies.

Mr. Hayes: As the hon. Gentleman knows, this is a wide-ranging debate. I notice that the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) has joined us. Sadly, I note that she is not wearing a fur coat.
I assure the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) that I am particularly worried that there will be difficulties in financing and funding the pay awards, which are especially generous. My right hon. and learned Friend and his able deputy, the Under-Secretary of State, have said that the Health Service should be cost-effective. That statement is greeted by the Opposition with howls of derision, but why should the Health Service be cost-effective? Why should not doctors understand the true cost of the treatment that is given to patients? Why should not the Health Service be run on a more commercial footing, so that the benefits may go directly into patient care?
We have had the Rayner reports and the efficiency reviews, and my own health authority has been particularly good in cutting back and allocating directly to patient care the resources that have been saved. In the next few years my health authority will be gaining about £20 million extra resources for the centralisation of acute casualties. There will be benefits all over my constituency and in neighbouring constituencies as a result. However, there are problems to which I must draw the Minister's attention.
The Government rightly say, "Make your health authority cost-effective. Run it like a commercial enterprise." Last year we had 4·2 per cent. allocated to us for pay awards. Rightly and properly, we shall have to find, on average, 8·6 per cent. for the nurses and about 12·1 per cent. for the additional workers. We have not settled on the figure for the ancillary workers, and we still have to find 6·3 per cent. for the doctors and nurses. On a half-yearly basis there will be a shortfall of £450,000. In a full financial year there will be a shortfall of £1 million.
The shortfall will cause us several problems which, sad to say, will be reflected in patient care. It would be wrong

and irresponsible to deny it. I am grateful for the considerable efforts made by my right hon. and learned Friend and his deputy in giving an extra £500 million—an additional 5·5 per cent.—to health authorities this year.
My health authority is not a RAWP gainer but a RAWP loser. It does not gain from the efficiencies. I know from where this funding will come. It might mean the closure of an acute ward in Princess Alexandra hospital in Harlow, costing £200,000, an acute ward at St. Margaret's hospital, costing £200,000, a children's ward at Herts and Essex hospital, costing £105,000, the accident and emergency department at Herts and Essex hospital at Bishop's Stortford, costing £105,000 and the associated casualty ward at the same hospital, costing £200,000, a reduction in community nursing at Waltham Abbey, costing £100,000 and the closure of the minor injuries ward at Saffron Walden hospital costing £30,000.

Mr. Robert Hughes: Will the hon. Gentleman give way?

Mr. Hayes: I shall not give way, out of deference to all those hon. Members who want to speak.
I support the Government's policy and the amount of money that they have put into the Health Service—20 per cent. in real terms since 1978. Since then there have been 12 per cent. more in-patients, 45 per cent. more day care attendances, 52 per cent. more patients accepted for kidney failure treatment and 112 per cent. more heart bypass operations. It would be foolish and churlish to ignore that.
I ask my right hon. and learned Friend the Minister to consider generously in the next financial settlement the plight of authorities, such as mine of West Essex, which have shown that they are prepared to make themselves cost-effective and put themselves on a commercial footing and which are not RAWP gainers but RAWP losers.

Mr. Laurie Pavitt: I wish to pick up some of the points of the hon. Member for Harlow (Mr. Hayes) in my own time and in my own way. The nurses have been conned and the con trick has been compounded by hypocrisy. The Government have made great play of the fact that they are accepting the pay award. I pay great tribute to the review body, which has done a first-class job, but the Government have not accepted its recommendations. As my hon. Friend the Member for Fife, Central (Mr. Hamilton) said, once again for the nurses it is jam tomorrow, never today.
Nurses suffer from the effects of two public attitudes—the Florence Nightingale attitude, whereby nurses are expected to live on pay that is not incomparable with the pay during the Crimean war, and from the attitude of "the nurses are so good; it will be all right tomorrow". In this case, "tomorrow" does not come until next February.
I am sorry that the Under-Secretary of State did not have a good day today. He was forced to flail around a number of other subjects. The hon. Gentleman is not usually short of matters to bring up. Nurses' pay in 1985–86—I do not need to labour the figures—means that they have been short-changed. The 10-month delay is exceptional—doctors faced a two-month delay. Why have one rule for doctors and another for nurses?
The next pay award for the nurses will be made on 1 April 1986, and the review body will have to report back


after that date. If the Government persist in their policy of phasing, in three years the nurses will have lost at least one year's worth of pay increases.
The Under-Secretary of State referred to the board and lodging charges for the people who will get the least out of this pay packet. Whereas nurses will not receive their pay increases until the end of August, board and lodging and other service charges for nurses who work in hospitals have increased. For four months these nurses paid extra money out of a pay packet which has not yet shown their pay increases.
The Government made great play of the fact that the nurses could have a review body on condition that they did not strike. For that reason the nurses were to have what the doctors have had since the 1960 Pilkington award. The Government know that the nurses never strike. Nurses have been disadvantaged compared with doctors. The doctors went on strike twice in 1974—first the junior doctors went on strike and then the consultants worked to rule. At that time my colleague Barbara Castle was Secretary of State. Because of the doctors' struggle in 1975 and 1976, the waiting lists increased tremendously and it took six or seven years to start to reduce the numbers. Yet there is no thought of stressing a condition of no industrial action in relation to the doctors.
When discussing the way in which nurses' pay has been funded we always come back to what has happened before. The Prime Minister makes this point regularly. Conservative Members say that between 1974 and 1979 there was a tremendous cut in capital expenditure. I can claim some credit for that. When Barbara Castle was made Secretary of State I was privileged to attend the planning conference at Sunningdale with the chief medical officers and the various boffins who surrounded the Secretary of State. About 75 per cent. of the huge resources of the NHS go towards pay. After the right hon. Member for Old Bexley and Sidcup (Mr. Heath) had had his four years in office, the Labour Government were faced with a choice. Once again, the Labour party came into office after a balance of payments deficit when the country was bankrupt. The choice was whether to give the money to people or to give it to buildings. Should the money be given to nurses or towards more equipment? I believe that the Labour Government were right to cut capital expenditure. The nurses' only good pay award was the 1974 Halsbury award. They could not have been given that award had the Labour Government not been prepared to cut capital expenditure so that nurses could have a fair deal.
The North-West Thames regional health authority is the authority for my area. I received an emergency notice stating that this year the authority has to find another £2 million. This is disastrous for economic planning, because budget estimates are made at the beginning of the year. What happens if, half-way through the year, the authority is told that it has £2 million less? It is nonsense for the Under-Secretary of State to say that these measures will not interfere with patient care. They can do nothing else but interfere. The Government cannot suddenly say in the middle of the year that the authority has to take £2 million out of the amount budgeted for, and claim that this will not interfere with patient care.
For three years every regional health authority was given a certain increase in its budget—about 0·5 per cent. for the North-West Thames regional health authority—through the RAWP formula. The North-West Thames

regional health authority has had a tough time. During the past three years a percentage of the increase has been for efficiency savings. It is money that is not given but has to be found within the budget. For three years there have been cuts in each of the regions, under the various budget headings, to make efficiency savings.
The wretched computer is a further con for the nurses because it cannot make payments before the end of August. Therefore, although the announcement was made in June, nurses do not see the money until four months after it is due. I know of no other employees who receive such treatment, yet we pay lip service to nurses and say how marvellous they are.
The Minister keeps saying that the Department does not yet know what it will receive from the Exchequer next year, and that it is still making estimates. The North-West Thames regional health authority now has a chairman, Mr. Doughty, and a general manager, Mr. Kenny, who has the same job that he held previously, but has been given more money and a fresh title. They say that next year £6 million more will be needed for nurses' pay on this award alone. Taken over the whole country, next year there will be another increase in nurses' pay. Therefore, unless the Government do a U-turn in their public expenditure policies, the money will not be available.
The second cheat relates to the £240 million which should have been paid on 1 April but which will start to be paid at only 5 per cent. at the end of August. Therefore, the Government will borrow money from the nurses for four months. Every year out of the kindness of its heart the Department of Social Security gives pensioners a £10 bonus. Considering the present rates of interest, if the Government have any sense of justice, they could give nurses in their Christmas pay packets the amount of accrued interest which the nurses will have lost during four months.
We bandy figures about, and I know no better jugglers of figures than the Minister for Health and the Secretary of State for Social Services. One minute money is there, the next it is not. I do not accept that the productivity argument for industry and commerce applies to the NHS.

Mr. John Patten: In my introductory remarks I said that, net of the reduction in the nurses' working week, 18,900 more nurses were on the wards than in 1979. Does that or does that not represent an improvement in health care in England?

Mr. Pavitt: That does not. The reduction in the working week from 40 to 37·5 hours accounts for a great deal of that. The latest figure I have from the Department of Employment shows that 9,500 nurses are on the dole. As I said earlier, the Minister chooses the figures to make selected points.
If the Department of Employment could announce to the House that 650,000 more people were in full-time employment and that 2·5 million more people were in part-time employment, that would be a success. However, when one learns that 650,000 more people are chronically ill and need hospitalisation, and that 2·5 million more people are so ill that they must be referred by their general practitioner to an out-patients department, that is a failure. It is a reflection of sick people in a sick society. There cannot be 4 million people unemployed without all the stress and problems that the NHS must counteract accumulating.
The Government have deceived the nurses by the funding of the pay award. I hope that the nurses will remember that when the Minister, or, if all the prophets are right and he climbs up the ladder before we return from the summer recess, his successor next deals with the subject. I hope that in the Queen's Speech he will guarantee that next year the nurses will not have a con trick played on them, as they had this year.

Mr. Richard Tracey: I welcome and congratulate the new hon. Member for Brecon and Radnor (Mr. Livsey). I am sorry to see that, having burst into the debate, he rushed out quickly; I hope that he does not find the House so fearsome that he has returned to the Brecon Beacons so soon. Today he has witnessed mark 2 of a Lib-Lab pact, with an appendix written by the Social Democratic party. When the debate is reported the public will know that the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) did an Armageddon job on the state of affairs in the National Health Service, and that the hon. Member for Oldham, West (Mr. Meacher) who is almost Armageddon itself, completely agreed with the speeches from the SDP Bench. We saw a similar great unity at the end of the 1970s, which led us into the disastrous position that then produced a large Conservative majority to run the country and the NHS properly.
I welcome what my right hon. and learned Friend the Minister for Health said in his interventions, and what my hon. Friend the Under-Secretary of State for Health and Social Security said about the Government's record on the NHS. The hon. member for Birkenhead (Mr. Field), who also burst into the debate and rushed off, asked whether we had received compliments from our constituents. My constituents who have been treated at Kingston hospital—the main hospital in the Kingston and Esher district health authority—are full of compliments for the doctors' and nurses' services, the food, the cleanliness, and every other aspect. If the hospital's record is ever attacked in the press, anybody who has been treated there jumps to its defence.

Mr. Hayes: My hon. Friend will undoubtedly have seen the recent Marplan poll which showed that 90 per cent. of those asked were satisfied and felt that they were well cared for by the NHS.

Mr. Tracey: I have seen that Marplan poll, and I noted that the Audit Commission found a similar high standard in the NHS when its officers reported.
Throughout the Health Service there are undoubtedly more doctors, more nurses, more out-patients being treated, more highly technical operations carried out, such as heart bypasses and kidney transplants, more dental treatment and a large hospital building programme. I welcome the Government's decision on the nurses' pay award.
The hon. Member for Ross, Cromarty and Skye has asked when we shall spell out how we shall pay for the extra award to the nurses, if we do not take money from the contingency fund. I refer him to the words of the amendment in the name of my right hon. Friend the Prime Minister. It states that the Government
welcomes the 5·5 per cent. increase in health authority and health board funding which, together with the extra resources

gained from cost improvement programmes, will enable service developments to take place in addition to the funding of the pay award.
That is the key factor, and answers his question in plain language.

Mr. Kennedy: Will the hon. Gentleman answer the question which the Under-Secretary of State, who spoke about many issues which had nothing to do with nurses' pay or the funding of health authorities, was not keen to answer? Will he answer the economic argument based on the Government's figures, which I spelled out in my speech? Is it not the case that, when the percentage figure in the Government's motion is analysed under the constraints against which the Government measure health spending, in the present year there will be a 3 per cent. cut?

Mr. Tracey: The hon. Gentleman made that point earlier, and I am sure that my right hon. and learned Friend the Minister for Health will answer it with complete authority.
My main reason for speaking in the debate is to stress that substantial savings can be made through the cost-effectiveness programmes. In May this year, my hon. Friend the Under-Secretary of State, answering a question in the House, said that £13·1 million savings had been made from cost-effectiveness programmes, £10·7 million as a result of contracts going out to tender and £2·7 million as a result of in-house savings after putting services out to tender. Those savings have been made in only a few district health authorities—the ones that have grasped the nettle, carried through the process faithfully and contracted out their services.
It is possible to achieve anything up to the remarkable savings—58 per cent.—made by Merton and Sutton district health authority on the cleaning of St. Helier hospital at Carshalton. The in-house service cost 1·4 million, and the new service costs £583,000.
Why will not Opposition Members, whether from the Labour party or from the other half of the new Lib-Lab pact, encourage trade unions to pursue those policies in better faith? Why do they always wish to destroy the efforts of district health authorities to put services out to tender? Why must the TUC produce propaganda documents——

Mr. Corbyn: Trade unions oppose the privatisation of cleaning and other services because the job is done less efficiently by private enterprise, and workers have worse conditions, lower wages, shorter holidays and fewer work prospects.

Mr. Tracey: That is an almost perfect paraphrase of the propaganda that one hears from Opposition Members.

Mr. John Patten: My hon. Friend mentioned the considerable savings made at St. Helier hospital. Alas, I must report to the House that one criticism of the district health authority was that the standard of work done by NHS employees was lower than the standard of work carried out by private contractors. It should not have been the case, but unfortunately it was.

Mr. Tracey: My hon. Friend is absolutely right. I wish to illustrate how far from the truth was the intervention of the hon. Member for Islington, North (Mr. Corbyn). There is no doubt that the TUC and the Health Service unions have pursued a campaign of destruction and cynicism when attempts are made by district health authorities to put


services out to tender. A classic example was Addenbrooke's hospital in Cambridge, whose problems have been reported in the House and outside by my hon. Friend the Member for Cambridgeshire, South-West (Sir A. Grant).
I end with the specific example of Barking hospital. Following a strike by cleaners in March 1984, the TUC reported a lack of regular and effective cleaning, resulting in the presence of grease, dirt and cockroaches. At the request of trade union representatives, an inspector from the Health and Safety Executive made three visits to the hospital. He reported:
As you know, I have recently made a series of visits to Barking Hospital to look at the standard of cleaning. I have visited in my opinion a reasonable cross-section of wards, public areas and service areas. On each occasion the hospital has been very clean and I have no cause to criticise. Accordingly I have no recommendation to make.
That report was made during the first year of the contract. It has been renewed by Redbridge district health authority for a further four years, which represents a saving of £150,000 a year and a total saving of £750,000. Such savings could he made in many district health authorities, and they would more than adequately fund part of the nurses' pay award.

Mr. Jeremy Corbyn: The hon. Member for Surbiton (Mr. Tracey) has just demonstrated everything that the Tory party hates about the Health Service. Conservative Members hate Health Service workers, especially the lowest-paid ancillary workers. That is why they are trying to destroy their jobs through privatisation, and their living standards through the inevitable cuts in wages and working conditions that follow privatisation. The brave people at Barking and Addenbrooke's hospitals, who fought for the principle of high standards of cleanliness in hospitals, deserve more praise than the hon. Gentleman gave to them.
I am sponsored by the National Union of Public Employees, which, with other unions, has many members among nurses and midwives in the NHS. The speeches of Conservative Members have not adequately demonstrated to the House the attitude of nurses and midwives to the Government and to the pay increase that has been offered. It is one of disgust and anger, and of shame at being stuck between a Government who will not adequately fund the Health Service and increasing demands for better health care. They are told that the real problem in the Health Service is high pay. That is why they are so angry about what the Government say about them.
NUPE has produced a substantial document entitled "End Poverty Pay—A Strategy for the 1980s", which tries to describe the erosion of the wages of local government and Health Service workers. It states:
Each year we are climbing up an escalator that is moving down, as the rising cost of living cuts away at our living standards. In some years we can beat inflation and our members are better off. But the Government is making it more and more difficult to climb the escalator, blocking our way with cash limits, the threat of job cuts and the threat of privatisation. So in some years the pay rises we are offered do not even match the cost of living.
That is true of the pay increases that have been offered to some nurses and midwives.
I should tell the House how appallingly low NHS pay is. Under existing pay arrangements for ancillary staff, who are the lowest paid in the NHS, 58·7 per cent. earn

less than £100 a week, 92 per cent. earn less than £150 a week and 10 per cent. earn less than £68·70 a week. By any standards, those wages are disgraceful. Before the Government's announcement, 33·1 per cent. of nurses and midwives earned less than £100 a week, 74·1 per cent. earned less than £150 a week and 10 per cent. earned less than £80·60 a week.
Everyone recognises that those who work in the Health Service, in whatever grade, have valuable and responsible jobs. Nurses and midwives are doing extremely valuable and skilled work. How many Conservative Members would be prepared to live on those wages? How many of them go round the country saying what a splendid job the nurses do, but are not prepared to pay them for the work that they must do? That is the issue facing us.
Under the Government, the way in which the poverty trap and the funding of the Health Service and local government work means that the people who have lost out most are already the worst off, and their prospects, particularly those of the nurses after this settlement, are not very good. There are 550,000 people employed as nurses, which is 484,000 whole-time equivalent jobs.
To give a couple of examples of the sort of pay levels I speak of, a nursing auxiliary will get an increase of £3·30 per week as a result of the settlement. Even under the retail price index figures·and people do not live on the retail price index but on what they can afford to buy and to eat—nursing auxiliaries should have an increase of £5 per week. A sister will get an increase of £36·42 per month. All these figures are verifiable, and in my view they are disgraceful.
Conservative Members have made great play of the way in which they believe hospital waiting lists are being reduced and, indeed, of the way in which they believe Health Service expenditure has gone up. I wish to quote from a letter written by Mr. D. J. Holdstock, MD, FRCP, of Ashford hospital, Middlesex, which appeared in The Guardian of 13 July:
Mr. Clarke claims that the NHS is treating more people. Like most statistics emanating from the Elephant and Castle, this is a myth. Many patients, particularly the mentally ill and elderly, are readmitted many times, having been discharged not because they are well enough to remain in the community, but to make room for others who are worse. Mr. Clarke's figures refer to numbers of admissions, not individuals. Community care, when it is available, is labour-intensive and therefore expensive; often it is a euphemism for care by hard-pressed and unsupported neighbours or relatives.
Many people in the country would support that statement and agree with it wholeheartedly.
The Government stand condemned for their attitude towards the Health Service and Health Service workers, whom they expect to bear the brunt of Government cuts in the Health Service and of hospital closures, of which more than 200 have occurred since the Government came into office. The Government expect these people to care for those who have been so badly treated by a Government who claim that they support the National Health Service when in reality they are reducing Health Service standards in the country. If hon. Members cared to talk to people who work in hospitals and to people who are or who expect to be patients in hospitals, they will observe a dangerously low level of morale and a deep feeling of anger towards the Government. People look forward to the day when the Government are swept out of office and those who genuinely care about the health of the people of the country are put into office.

Mr. Michael Meadowcroft: I am glad that so many hon. Members have taken part in this important debate even though some were rather wide of the mark in their comments. I had hoped that we would have more of substance from the Under-Secretary. I had hoped that we might have had a rather more formidable attack on the form of words of the motion and a more passionate defence of the amendment.
At one point, the hon. Gentleman used some figures to match nurses' pay to inflation. It is important that we study the figures carefully. Their validity depends on what base year one uses. If one takes the base year of 1979, there has been some increase in the comparison between nurses' pay and inflation since that time. As was mentioned by the hon. Member for Brent, South (Mr. Pavitt) the fact remains that, if one considers the year following the 1975 Halsbury report and awards, nurses' pay has not yet got back to that same level.

Mr. James Couchman: Under the Lib-Lab pact.

Mr. Meadowcroft: The hon. Member for Gillingham (Mr. Couchman) assists me in his reference to a pact. I would be as critical if not more critical of members of the Labour Government who allowed nurses' pay to slip back more than the Conservatives.
The figure dropped between 1975 and 1978, it picked up a little in 1979—and we might speculate on the reasons for that—and it picked up still further in 1980, but it has dropped back since and has never returned to the 1979 level.
The Under-Secretary also challenged us on patient numbers. He said that we ought to come clean on whether we were prepared to accept that more patients were treated. Of course I accept that. There is some element of double counting of people. He referred to the number of treatments. If people are discharged early and have to go back into hospital, they count as two patients in the figures. This should be recognised.
One cannot always measure the adequacy of care by the number of patients treated. I have referred on other occasions to renal work. The local health authority in Leeds is delighted to have less dialysis done because this means that more transplants are carried out. It wishes to see a reduction in the number of patients because this means better health care. As large mental health institutions are closed, there will be fewer patients in NHS care, but more people out in the community, and again, the figures will go down. Therefore, I do not see that the number of patients being treated is an adequate measure of improvement in the Health Service. I would argue with the hon. Gentleman, as I have done on other occasions, that the Government might better claim that the health of a country has improved because fewer people are being treated than claim that this is so because more people are being treated.
The Minister then tried to drive a wedge between the two parties in the alliance. I will give him the official alliance policy position. It has to be recognised that, in the great mass parties in the Chamber, there are differences between all sorts of people. The hon. Member for Harlow (Mr. Hayes) veered a bit here and a bit there, but he expressed his opinion. He was not entirely without criticism. That will happen with all mass parties.

Ultimately, one has to come down to some agreed statement, and I will give it to the Minister. The joint programme for the last election, in 1983, stated:
the continuing commitment of all NHS staff is vital if the health service is to deliver the best care it can. This means that NHS staff must be properly and fairly treated. We gave our commitment … to determine pay in the public services by a new system based on fair comparison with other groups and a fair arbitration procedure which will also apply to NHS staff.
I think that that is straightforward. The Minister asked for it, and he has it.
After that, we went all round the block—defence, nuclear power and even jazz. I am not averse to a plug for the band—heaven knows we need it—but with no admission fees. I am also worried about the reference to the band because I have maintained my reputation as a musician by never playing in public, and I was hoping to continue in that.
What is rather alarming—it may be a new trend in the speeches of the Minister—is that, just when I thought that he was going to return to the motion and to the peroration, he sat down. I could not understand this. Not only was there no peroration, but there was no finger wagging. Where is the Minister without some finger wagging?
It was a pleasure to hear the contribution of my new hon. Friend the Member for Brecon and Radnor (Mr. Livsey). Indeed, I anticipate that the increased frequency of the alliance Opposition days will coincide with the increased frequency of being able to welcome new Members representing the Liberal party.
The hon. Member for Harlow baffled me. He started off as a straightforward pure monetarist. I thought that he was going to go straightforwad down the line. He then veered in a centre forward direction but, before he could get right into that camp, he drew back from the brink. At the end, I thought that there was a slight warning. The right hon. Member for Cambridgeshire, South-East (Mr. Pym) should beware if the hon. Member for Harlow sends him a post-dated cheque because the cheque will certainly be cancelled long before the right hon. Gentleman gets round to cashing it.
We then heard the hon. Member for Surbiton (Mr. Tracey), who, I thought, was unnecessarily snide and looked for ulterior motives. I do not believe that there is a monopoly of compassion in any political party. I have never been one who wishes to look into people's hearts and minds to find some ulterior motive. One accepts the debate on the terms in which it is framed and put forward. Thus, if things are right, they should be supported and, if they are wrong, one should oppose them rather than look for some ulterior motive. If things are as good as the hon. Gentleman set out, why has there been virtually no increase in male life expectancy in the 40 years since the inception of the National Health Service? It is not enough to say that things are wonderful, that the Government are doing a great job and that we ought to be able to support everything that they do.
The hon. Gentleman went on about privatisation. The Select Committee report published a week ago says that, although we have had pressure for privatisation for four years, that process has not yet "brought home the bacon". It is difficult for people in the Health Service to count and treble-count the same efficiency savings that the Government are demanding.
I said in an intervention that about 25 per cent. of spending does not go on staff, so the spending available


from which cuts can be made is smaller than many people imagine. It has not been proved that it is wise from an economic or from a service point of view to cut staff numbers and their pay.
The logic of a pay review is that, if there is to be independent inspection of pay, the Government must fund it. The psychological effect on nurses of having to fight for pay increases at the expense of the service to which they are committed is immoral and insupportable.

The Minister for Health (Mr. Kenneth Clarke): I congratulate the hon. Member for Brecon and Radnor (Mr. Livsey) on his election and on his maiden speech. He spoke with admirable brevity and clarity and with patent sincerity. I am sure that we all wish him well and trust that he will represent his constituents as well as his distinguished predecessor, Mr. Tom Hooson, whom we all miss.
When the hon. Gentleman referred to his constituency and matters relevant to this debate, he slipped into one or two factual errors. He talked of a 3·5 per cent. cash increase to his health authority, which has received a 4·5 per cent. cash increase. He also heavily laboured the effect of this year's pay award on the finances of Powys health authority. It is costing that authority £22,000 more than it was planning—0·1 per cent. of its revenue allocation—and Powys is one of those authorities which is unaffected by this year's award. I trust that, away from the rhetoric of the by-election, we shall find that, as with everything else the hon. Gentleman said, he devotes himself to the problems of his health authority. I hope that he will consider the terms of the first alliance motion that he has been asked to support.
The hon. Member for Ross, Cromarthy and Skye (Mr. Kennedy) tried to construct a great deal of bad news out of the opening of a new hospital in the Highlands. He also tried to create a good deal of bad news out of this year's review body recommendations and the pay awards for nurses and midwives. That seemed to be the whole point of the argument advanced by the Liberal, Social Democratic and Labour Opposition. They cannot sweep away the underlying good news for nurses, and those who have their interests at heart, of this year's pay award. With the exception of one or two speeches, I detected no criticism of the review body system, or of the size of the award that we are giving.
The creation of the nurses and midwives review body is one of the Government's major achievements. As my hon. Friend the Under-Secretary of State said, it opens up the prospect of nurses' pay no longer being dealt with by those pre-general election one-off gestures. We now have a permanent system which will give the Government the advice of independent people about the right level of pay for nurses and which will put Governments under an obligation to honour its recommendations.
If the national interest determines it, we will not follow the body's recommendations, but normally, as this year, I am sure that the Government will implement the recommended pay awards. I do not meet many nurses who think that they would be better off going back to what preceded the review body system which the Government have set up.
I listened with care to see whether any of the Opposition parties would commit themselves to the review body. Before we announced the award, the Leader of the

Opposition went to the Royal College of Nursing conference and threw out vague figures about the money that Labour might give nurses. I do not think that he expected the level of the full-year award that was about to be forthcoming and hope that what he said was not intended to imply that, under Labour, we should go back to some form of bargaining process. We ought to know whether the review body is safe under Labour.
The alliance is meant to believe in pay policy. The hon. Member for Leeds, West (Mr. Meadowcroft) described what I admit was a fairly generalised passage from the alliance's last election manifesto concerning the arbitration arrangements that might be set up for all public sector workers. If I were a nurse, I am not at all sure that I should be happy to exchange the review body system that we have given to them because of the regard in which we hold them and because they do not take strike action against their patients, unlike other key public sector workers and their clients, for some form of Liberal pay policy for all public sector workers. When, under the Lib-Lab pact, there was pay policy, nurses did especially badly compared with inflation and other workers.
After the Halsbury award, between June 1974 and April 1979, nurses' pay went up by 65 per cent., whereas the retail prices index went up by 97 per cent. That is the record of the Labour Government and the Lib-Lab pact and their pay policy. Before this year's award, we had begun to redress the balance. My hon. Friend the Under-Secretary of State explained the effect of this year's award. By March 1985—before that award—the pay bill had increased by 126 per cent. because it was already 23 per cent. ahead of prices and we had cut hours from 40 to 37·5 a week. We had also employed 57,000 more whole-time equivalents in England. This year's award gives an average of 9 per cent. in a full year across the profession, up to 14 per cent. for sisters and up to 11 per cent. for staff nurses. That is an extremely good settlement.
The Opposition have to challenge what I believe is undilutedly good news for the Health Service by means of this motion on how the award will be funded. It is being funded as we always said it would be and in a way which health authorities can perfectly well contend with while delivering the patient services that we require. We have said from the word go that the cash limits for the Health Service this year would be increased by 5·5 per cent. We had to say what the Government could afford for the whole NHS, and not divide it artificially.
My hon. Friend the Member for Wells (Mr. Heathcoat-Amory) described the process clearly. I parody what he said, but we do not collect from the Treasury—nor would any Government—one pile of pound notes labelled "services" and another pile labelled "pay." There is a cash limit, which Governments have always determined. We told the review body of that limit. I do not care what anybody said in the Select Committee. I was at the negotiations with the Treasury when we agreed that the cash limit covered everything. There was no 3 per cent. norm for anybody. Therefore, when the review body made its recommendations, it knew what it was working within.
The chairman of the review body made it clear in public statements that he left the timing and implementation of an award which he knew amounted to 9 per cent. in a full year to the Government. We had to make a judgment, and we made a judgment precisely to avoid the dangers of which the motion accuses us.
We knew that health authority limits in England were going up by £500 million and that health authorities had identified for us £150 million which could be provided through cost improvements—not efficiency savings as some people have called them, and certainly not cuts. Those cost improvements did not affect patient care. We therefore decided that we could pay nurses in two instalments, so the total cost fell as £240 million in one year.
Hon. Members have tried to find anecdotal evidence to the contrary. The hon. Member for Ross, Cromarty and Skye ought to go back to his stray delegate at Cardiff from Teesside and ask how on earth a 2 per cent. cut is being forced on that authority as a result of the figures that I have given. Hon. Members, including the hon. Member for Oldham, West (Mr. Meacher) and even my hon. Friend the Member for Harlow (Mr. Hayes), threw in examples of health authorities with all kinds of difficulties, but none of those difficulties was attributable to nurses' pay.
The fact is that at the new Arrowe Hall hospital in Birkenhead, at the new Oldham hospital being built at Oldham and in my health authority and others, services and increased pay are going hand in hand because we are giving more money. The alliance even tried to outdo us in money. The hon. Member for Ross, Cromarty and Skye said that the alliance would increase expenditure by 1·5 per cent. each year in economic cost terms. If we had followed that modest target, health authorities would have £500 million less to spend than they have. He is promising——

Mr. A. J. Beith: rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the original words stand part of the Question:—

The House divided:: Ayes 154, Noes 233.

Division No. 271]
[7 pm


AYES


Ashton, Joe
Craigen, J. M.


Atkinson, N. (Tottenham)
Crowther, Stan


Bagier, Gordon A. T.
Cunliffe, Lawrence


Banks, Tony (Newham NW)
Dalyell, Tam


Beith, A. J.
Davies, Ronald (Caerphilly)


Benn, Tony
Davis, Terry (B'ham, H'ge H'l)


Bermingham, Gerald
Deakins, Eric


Bidwell, Sydney
Dewar, Donald


Blair, Anthony
Dixon, Donald


Boothroyd, Miss Betty
Dobson, Frank


Boyes, Roland
Dormand, Jack


Brown, Hugh D. (Provan)
Dubs, Alfred


Brown, Ron (E'burgh, Leith)
Duffy, A. E. P.


Bruce, Malcolm
Dunwoody, Hon Mrs G.


Buchan, Norman
Eadie, Alex


Caborn, Richard
Eastham, Ken


Callaghan, Jim (Heyw'd &amp; M)
Edwards, Bob (W'h'mpt'n SE)


Campbell-Savours, Dale
Evans, John (St. Helens N)


Carlile, Alexander (Montg'y)
Ewing, Harry


Carter-Jones, Lewis
Fatchett, Derek


Clark, Dr David (S Shields)
Field, Frank (Birkenhead)


Clarke, Thomas
Fields, T. (L'pool Broad Gn)


Clay, Robert
Fisher, Mark


Clwyd, Mrs Ann
Flannery, Martin


Cocks, Rt Hon M. (Bristol S.)
Foot, Rt Hon Michael


Cook, Robin F. (Livingston)
Foster, Derek


Corbett, Robin
Freeson, Rt Hon Reginald


Corbyn, Jeremy
Garrett, W. E.


Cowans, Harry
George, Bruce





Gilbert, Rt Hon Dr John
Mitchell, Austin (G't Grimsby)


Godman, Dr Norman
Nellist, David


Golding, John
Oakes, Rt Hon Gordon


Gould, Bryan
O'Neill, Martin


Gourlay, Harry
Orme, Rt Hon Stanley


Hamilton, James (M'well N)
Owen, Rt Hon Dr David


Hamilton, W. W. (Central Fife)
Park, George


Hancock, Mr. Michael
Parry, Robert


Hardy, Peter
Patchett, Terry


Harrison, Rt Hon Walter
Pavitt, Laurie


Hart, Rt Hon Dame Judith
Pendry, Tom


Haynes, Frank
Penhaligon, David


Heffer, Eric S.
Pike, Peter


Hogg, N. (C'nauld &amp; Kilsyth)
Powell, Raymond (Ogmore)


Holland, Stuart (Vauxhall)
Prescott, John


Home Robertson, John
Radice, Giles


Howells, Geraint
Randall, Stuart


Hoyle, Douglas
Rees, Rt Hon M. (Leeds S)


Hughes, Robert (Aberdeen N)
Richardson, Ms Jo


Hughes, Roy (Newport East)
Roberts, Ernest (Hackney N)


Hughes, Sean (Knowsley S)
Robertson, George


Hughes, Simon (Southwark)
Rogers, Allan


Jenkin, Rt Hon Patrick
Rooker, J. W.


John, Brynmor
Ross, Stephen (Isle of Wight)


Jones, Barry (Alyn &amp; Deeside)
Rowlands, Ted


Kirkwood, Archy
Sheldon, Rt Hon R.


Lambie, David
Shore, Rt Hon Peter


Lamond, James
Short, Ms Clare (Ladywood)


Leighton, Ronald
Short, Mrs R.(Whampt'n NE)


Lewis, Ron (Carlisle)
Skinner, Dennis


Lewis, Terence (Worsley)
Snape, Peter


Litherland, Robert
Soley, Clive


Livsey, Richard
Steel, Rt Hon David


McCartney, Hugh
Stewart, Rt Hon D. (W Isles)


McDonald, Dr Oonagh
Stott, Roger


McKay, Allen (Penistone)
Thomas, Dafydd (Merioneth)


McKelvey, William
Thomas, Dr R. (Carmarthen)


MacKenzie, Rt Hon Gregor
Thompson, J. (Wansbeck)


Maclennan, Robert
Thorne, Stan (Preston)


McNamara, Kevin
Tinn, James


McTaggart, Robert
Wainwright, R.


McWilliam, John
Warden, Gareth (Gower)


Madden, Max
Wareing, Robert


Mason, Rt Hon Roy
Wilson, Gordon


Maxton, John
Woodall, Alec


Maynard, Miss Joan
Wrigglesworth, Ian


Meacher, Michael



Michie, William
Tellers for the Ayes:


Millan, Rt Hon Bruce
Mr. Michael Meadowcroft and Mr. Charles Kennedy.


Miller, Dr M. S. (E Kilbride)





NOES


Adley, Robert
Browne, John


Amess, David
Bruinvels, Peter


Ancram, Michael
Buchanan-Smith, Rt Hon A.


Arnold, Tom
Buck, Sir Antony


Aspinwall, Jack
Budgen, Nick


Atkins, Rt Hon Sir H.
Burt, Alistair


Baker, Rt Hon K. (Mole Vall'y)
Butcher, John


Baker, Nicholas (N Dorset)
Butterfill, John


Baldry, Tony
Carlisle, John (N Luton)


Beaumont-Dark, Anthony
Carlisle, Rt Hon M. (W'ton S)


Bendall, Vivian
Carttiss, Michael


Bennett, Rt Hon Sir Frederic
Cash, William


Bevan, David Gilroy
Chalker, Mrs Lynda


Biffen, Rt Hon John
Channon, Rt Hon Paul


Biggs-Davison, Sir John
Chapman, Sydney


Blackburn, John
Chope, Christopher


Blaker, Rt Hon Sir Peter
Clark, Hon A. (Plym'th S'n)


Bonsor, Sir Nicholas
Clarke, Rt Hon K. (Rushcliffe)


Boscawen, Hon Robert
Clegg, Sir Walter


Bottomley, Peter
Cockeram, Eric


Bottomley, Mrs Virginia
Colvin, Michael


Bowden, A. (Brighton K'to'n)
Coombs, Simon


Bowden, Gerald (Dulwich)
Cope, John


Braine, Rt Hon Sir Bernard
Corrie, John


Bright, Graham
Couchman, James


Brinton, Tim
Cranborne, Viscount


Brooke, Hon Peter
Critchley, Julian


Brown, M. (Brigg &amp; Cl'thpes)
Crouch, David






Currie, Mrs Edwina
Neale, Gerrard


Dorrell, Stephen
Needham, Richard


Douglas-Hamilton, Lord J.
Nelson, Anthony


Dover, Den
Neubert, Michael


Dunn, Robert
Newton, Tony


Durant, Tony
Nicholls, Patrick


Dykes, Hugh
Normanton, Tom


Eggar, Tim
Onslow, Cranley


Emery, Sir Peter
Osborn, Sir John


Evennett, David
Ottaway, Richard


Eyre, Sir Reginald
Page, Sir John (Harrow W)


Fairbairn, Nicholas
Page, Richard (Herts SW)


Fallon, Michael
Parkinson, Rt Hon Cecil


Favell, Anthony
Patten, Christopher (Bath)


Fenner, Mrs Peggy
Patten, J. (Oxf W &amp; Abdgn)


Fletcher, Alexander
Peacock, Mrs Elizabeth


Fookes, Miss Janet
Pollock, Alexander


Forman, Nigel
Porter, Barry


Forth, Eric
Portillo, Michael


Fowler, Rt Hon Norman
Powell, William (Corby)


Fox, Marcus
Powley, John


Garel-Jones, Tristan
Price, Sir David


Glyn, Dr Alan
Prior, Rt Hon James


Gower, Sir Raymond
Proctor, K. Harvey


Griffiths, Sir Eldon
Raffan, Keith


Gummer, John Selwyn
Renton, Tim


Hamilton, Hon A. (Epsom)
Rhodes James, Robert


Hargreaves, Kenneth
Rhys Williams, Sir Brandon


Hayes, J.
Ridley, Rt Hon Nicholas


Hayhoe, Rt Hon Barney
Ridsdale, Sir Julian


Hayward, Robert
Rippon, Rt Hon Geoffrey


Heathcoat-Amory, David
Robinson, Mark (N'port W)


Henderson, Barry
Roe, Mrs Marion


Hickmet, Richard
Rowe, Andrew


Hicks, Robert
Ryder, Richard


Hill, James
Sackville, Hon Thomas


Hind, Kenneth
Sainsbury, Hon Timothy


Holland, Sir Philip (Gedling)
Sayeed, Jonathan


Holt, Richard
Shaw, Sir Michael (Scarb')


Hordern, Sir Peter
Shelton, William (Streatham)


Howard, Michael
Shepherd, Colin (Hereford)


Howell, Rt Hon D. (G'ldford)
Shersby, Michael


Hunt, David (Wirral)
Silvester, Fred


Jenkin, Rt Hon Patrick
Sims, Roger


Jessel, Toby
Skeet, T. H. H.


Key, Robert
Smith, Sir Dudley (Warwick)


Knight, Dame Jill (Edgbaston)
Smith, Tim (Beaconsfield)


Knowles, Michael
Soames, Hon Nicholas


Knox, David
Speed, Keith


Lawler, Geoffrey
Speller, Tony


Lennox-Boyd, Hon Mark
Spencer, Derek


Lewis, Sir Kenneth (Stamf'd)
Spicer, Jim (W Dorset)


Lightbown, David
Squire, Robin


Lilley, Peter
Stanbrook, Ivor


Lord, Michael
Stanley, John


McCurley, Mrs Anna
Steen, Anthony


Macfarlane, Neil
Stern, Michael


MacKay, Andrew (Berkshire)
Stevens, Lewis (Nuneaton)


MacKay, John (Argyll &amp; Bute)
Stewart, Allan (Eastwood)


Maclean, David John
Stewart, Andrew (Sherwood)


McQuarrie, Albert
Stradling Thomas, J.


Madel, David
Sumberg, David


Major, John
Taylor, Teddy (S'end E)


Malins, Humfrey
Tebbit, Rt Hon Norman


Marlow, Antony
Temple-Morris, Peter


Marshall, Michael (Arundel)
Terlezki, Stefan


Mates, Michael
Thompson, Donald (Calder V)


Mather, Carol
Thorne, Neil (Ilford S)


Maude, Hon Francis
Thornton, Malcolm


Mawhinney, Dr Brian
Thurnham, Peter


Maxwell-Hyslop, Robin
Townend, John (Bridlington)


Mills, Iain (Meriden)
Townsend, Cyril D. (B'heath)


Mills, Sir Peter (West Devon)
Tracey, Richard


Moate, Roger
Twinn, Dr Ian


Montgomery, Sir Fergus
van Straubenzee, Sir W.


Moore, John
Viggers, Peter


Morris, M. (N'hampton, S)
Waddington, David


Morrison, Hon C. (Devizes)
Waldegrave, Hon William


Morrison, Hon P. (Chester)
Walden, George


Murphy, Christopher
Wall, Sir Patrick





Waller, Gary
Wolfson, Mark


Ward, John
Wood, Timothy


Wardle, C. (Bexhill)
Woodcock, Michael


Warren, Kenneth
Yeo, Tim


Wells, Bowen (Hertford)
Young, Sir George (Acton)


Wells, Sir John (Maidstone)
Younger, Rt Hon George


Wheeler, John



Whitney, Raymond
Tellers for the Noes:


Wilkinson, John
Mr. Ian Lang and Peter Lloyd.


Winterton, Mrs Ann



Winterton, Nicholas

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 33 (Questions on amendments):——

The House divided: Ayes 223, Noes 148.

Division No. 272]
[7.12 pm


AYES


Adley, Robert
Dunn, Robert


Amess, David
Durant, Tony


Ancram, Michael
Dykes, Hugh


Arnold, Tom
Eggar, Tim


Aspinwall, Jack
Emery, Sir Peter


Baker, Rt Hon K. (Mole Vall'y)
Evennett, David


Baker, Nicholas (N Dorset)
Eyre, Sir Reginald


Baldry, Tony
Fairbairn, Nicholas


Beaumont-Dark, Anthony
Fallon, Michael


Bendall, Vivian
Favell, Anthony


Bennett, Rt Hon Sir Frederic
Fenner, Mrs Peggy


Bevan, David Gilroy
Fletcher, Alexander


Biffen, Rt Hon John
Fookes, Miss Janet


Biggs-Davison, Sir John
Forman, Nigel


Blackburn, John
Forth, Eric


Bonsor, Sir Nicholas
Fowler, Rt Hon Norman


Boscawen, Hon Robert
Fox, Marcus


Bottomley, Peter
Garel-Jones, Tristan


Bottomley, Mrs Virginia
Glyn, Dr Alan


Bowden, A. (Brighton K'to'n)
Gower, Sir Raymond


Bowden, Gerald (Dulwich)
Gregory, Conal


Bright, Graham
Griffiths, Sir Eldon


Brinton, Tim
Hamilton, Hon A. (Epsom)


Brooke, Hon Peter
Hargreaves, Kenneth


Brown, M. (Brigg &amp; Cl'thpes)
Hayhoe, Rt Hon Barney


Browne, John
Hayward, Robert


Bruinvels, Peter
Heathcoat-Amory, David


Bryan, Sir Paul
Henderson, Barry


Buchanan-Smith, Rt Hon A.
Hickmet, Richard


Buck, Sir Antony
Hicks, Robert


Budgen, Nick
Hill, James


Burt, Alistair
Hind, Kenneth


Butcher, John
Holland, Sir Philip (Gedling)


Butterfill, John
Holt, Richard


Carlisle, John (N Luton)
Hordern, Sir Peter Howell


Carlisle, Rt Hon M. (W'ton S)
Howell, Rt Hon D. (G'ldford)


Carttiss, Michael
Hunt, David (Wirral)


Cash, William
Jenkin, Rt Hon Patrick


Chalker, Mrs Lynda
Key, Robert


Channon, Rt Hon Paul
Knight, Dame Jill (Edgbaston)


Chapman, Sydney
Knowles, Michael


Chope, Christopher
Knox, David


Clark, Hon A. (Plym'th S'n)
Lang, Ian


Clarke, Rt Hon K. (Rushcliffe)
Lawler, Geoffrey


Clegg, Sir Walter
Lennox-Boyd, Hon Mark


Cockeram, Eric
Lewis, Sir Kenneth (Stamf'd)


Colvin, Michael
Lightbown, David


Coombs, Simon
Lilley, Peter


Cope, John
Lord, Michael


Corrie, John
McCurley, Mrs Anna


Couchman, James
Macfarlane, Neil


Cranborne, Viscount
MacKay, Andrew (Berkshire)


Critchley, Julian
MacKay, John (Argyll &amp; Bute)


Crouch, David
Maclean, David John


Currie, Mrs Edwina
McQuarrie, Albert


Dorrell, Stephen
Madel, David


Douglas-Hamilton, Lord J.
Major, John


Dover, Den
Malins, Humfrey






Marlow, Antony
Sims, Roger


Marshall, Michael (Arundel)
Smith, Sir Dudley (Warwick)


Mates, Michael
Smith, Tim (Beaconsfield)


Mather, Carol
Soames, Hon Nicholas


Maude, Hon Francis
Speed, Keith


Mawhinney, Dr Brian
Speller, Tony


Maxwell-Hyslop, Robin
Spencer, Derek


Mills, Iain (Meriden)
Spicer, Jim (W Dorset)


Mills, Sir Peter (West Devon)
Squire, Robin


Moate, Roger
Stanbrook, Ivor


Montgomery, Sir Fergus
Stanley, John


Moore, John
Steen, Anthony


Morris, M. (N'hampton, S)
Stern, Michael


Morrison, Hon C. (Devizes)
Stevens, Lewis (Nuneaton)


Morrison, Hon P. (Chester)
Stewart, Allan (Eastwood)


Murphy, Christopher
Stewart, Andrew (Sherwood)


Neale, Gerrard
Stradling Thomas, J.


Needham, Richard
Sumberg, David


Nelson, Anthony
Taylor, Teddy (S'end E)


Newton, Tony
Temple-Morris, Peter


Nicholls, Patrick
Terlezki, Stefan


Normanton, Tom
Thompson, Donald (Calder V)


Onslow, Cranley
Thorne, Neil (Ilford S)


Ottaway, Richard
Thornton, Malcolm


Page, Sir John (Harrow W)
Thurnham, Peter


Page, Richard (Herts SW)
Townend, John (Bridlington)


Parkinson, Rt Hon Cecil
Townsend, Cyril D. (B'heath)


Patten, Christopher (Bath)
Tracey, Richard


Patten, J. (Oxf W &amp; Abdgn)
Twinn, Dr Ian


Peacock, Mrs Elizabeth
Viggers, Peter


Pollock, Alexander
Waddington, David


Porter, Barry
Waldegrave, Hon William


Portillo, Michael
Walden, George


Powell, William (Corby)
Wall, Sir Patrick


Powley, John
Waller, Gary


Price, Sir David
Ward, John


Prior, Rt Hon James
Wardle, C. (Bexhill)


Proctor, K. Harvey
Warren, Kenneth


Raffan, Keith
Wells, Bowen (Hertford)


Renton, Tim
Wells, Sir John (Maidstone)


Rhodes James, Robert
Wheeler, John


Rhys Williams, Sir Brandon
Whitney, Raymond


Ridley, Rt Hon Nicholas
Wilkinson, John


Ridsdale, Sir Julian
Winterton, Mrs Ann


Robinson, Mark (N'port W)
Winterton, Nicholas


Roe, Mrs Marion
Wolfson, Mark


Rowe, Andrew
Wood, Timothy


Ryder, Richard
Woodcock, Michael


Sackville, Hon Thomas
Yeo, Tim


Sainsbury, Hon Timothy
Young, Sir George (Acton)


Sayeed, Jonathan
Younger, Rt Hon George


Shaw, Sir Michael (Scarb')



Shelton, William (Streatham)
Tellers for the Ayes:


Shepherd, Colin (Hereford)
Mr. Michael Neubert and Mr. Peter Lloyd.


Shersby, Michael



Silvester, Fred





NOES


Atkinson, N. (Tottenham)
Carlile, Alexander (Montg'y)


Bagier, Gordon A. T.
Carter-Jones, Lewis


Banks, Tony (Newham NW)
Clark, Dr David (S Shields)


Beith, A. J.
Clarke, Thomas


Benn, Tony
Clay, Robert


Bermingham, Gerald
Clwyd, Mrs Ann


Bidwell, Sydney
Cocks, Rt Hon M. (Bristol S.)


Blair, Anthony
Cook, Robin F. (Livingston)


Boothroyd, Miss Betty
Corbett, Robin


Boyes, Roland
Corbyn, Jeremy


Bray, Dr Jeremy
Cowans, Harry


Brown, Gordon (D'f'mline E)
Craigen, J. M.


Brown, Hugh D. (Provan)
Crowther, Stan


Brown, Ron (E'burgh, Leith)
Cunliffe, Lawrence


Bruce, Malcolm
Dalyell, Tam


Buchan, Norman
Davies, Ronald (Caerphilly)


Caborn, Richard
Davis, Terry (B'ham, H'ge H'l)


Callaghan, Jim (Heyw'd &amp; M)
Deakins, Eric


Campbell-Savours, Dale
Dewar, Donald





Dixon, Donald
McWilliam, John


Dobson, Frank
Madden, Max


Dormand, Jack
Mason, Rt Hon Roy


Dubs, Alfred
Maxton, John


Duffy, A. E. P.
Maynard, Miss Joan


Dunwoody, Hon Mrs G.
Meacher, Michael


Eadie, Alex
Michie, William


Eastham, Ken
Millan, Rt Hon Bruce


Edwards, Bob (W'h'mpt'n SE)
Miller, Dr M. S. (E Kilbride)


Evans, John (St. Helens N)
Mitchell, Austin (G't Grimsby)


Ewing, Harry
Nellist, David


Fatchett, Derek
Oakes, Rt Hon Gordon


Field, Frank (Birkenhead)
O'Neill, Martin


Fields, T. (L'pool Broad Gn)
Orme, Rt Hon Stanley


Fisher, Mark
Parry, Robert


Flannery, Martin
Patchett, Terry


Foster, Derek
Pavitt, Laurie


Freeson, Rt Hon Reginald
Pendry, Tom


Garrett, W. E.
Penhaligon, David


George, Bruce
Pike, Peter


Gilbert, Rt Hon Dr John
Powell, Raymond (Ogmore)


Godman, Dr Norman
Prescott, John


Golding, John
Radice, Giles


Gould, Bryan
Randall, Stuart


Gourlay, Harry
Redmond, M.


Hamilton, James (M'well N)
Rees, Rt Hon M. (Leeds S)


Hamilton, W. W. (Central Fife)
Richardson, Ms Jo


Hancock, Mr. Michael
Roberts, Ernest (Hackney N)


Hardy, Peter
Robertson, George


Harrison, Rt Hon Walter
Rogers, Allan


Haynes, Frank
Rooker, J. W.


Heffer, Eric S.
Ross, Stephen (Isle of Wight)


Hogg, N. (C'nauld &amp; Kilsyth)
Rowlands, Ted


Holland, Stuart (Vauxhall)
Sheldon, Rt Hon R.


Home Robertson, John
Short, Ms Clare (Ladywood)


Howells, Geraint
Short, Mrs H.(W'hampt'n NE)


Hoyle, Douglas
Skinner, Dennis


Hughes, Robert (Aberdeen N)
Snape, Peter


Hughes, Sean (Knowsley S)
Soley, Clive


Hughes, Simon (Southwark)
Steel, Rt Hon David


Jenkins, Rt Hon Roy (Hillh'd)
Stewart, Rt Hon D. (W Isles)


John, Brynmor
Stott, Roger


Jones, Barry (Alyn &amp; Deeside)
Thomas, Dafydd (Merioneth)


Kennedy, Charles
Thomas, Dr R. (Carmarthen)


Lambie, David
Thompson, J. (Wansbeck)


Lamond, James
Thorne, Stan (Preston)


Leighton, Ronald
Tinn, James


Lewis, Ron (Carlisle)
Wainwright, R.


Lewis, Terence (Worsley)
Wardell, Gareth (Gower)


Livsey, Richard
Wareing, Robert


McDonald, Dr Oonagh
Wilson, Gordon


McKay, Allen (Penistone)
Woodall, Alec


McKelvey, William
Wrigglesworth, Ian


MacKenzie, Rt Hon Gregor



Maclennan, Robert
Tellers for the Noes:


McNamara, Kevin
Mr. Michael Meadowcroft and Mr. Archy Kirkwood.


McTaggart, Robert

Question accordingly agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved,
That this House congratulates the Government on implementing the recommendations of the Health Service Pay Review Bodies and awarding a fair pay increase to all the staff concerned, with particularly high awards for staff nurses and ward sisters; notes that nurses' pay has risen by 23 per cent. in real terms between April 1979 and March 1985 and will rise significantly this year as a result of the Review Body award; welcomes the 5·5 per cent. increase in health authority and health board funding which, together with the extra resources gained from cost improvement programmes, will enable service developments to take place in addition to the funding of the pay award; and notes with approval the continuing increases in the number of patients treated by the Health Service.

GLC Lorry Ban (Judgment)

Mrs. Gwyneth Dunwoody: On a point of order, Mr. Deputy Speaker. Have you been asked by the Secretary of State for Transport for permission to come to the House and make a statement on the findings of Mr. Justice McNeill today in the High Court? According to The London Standard, Mr. Justice McNeill informed the court that the Secretary of State's refusal to approve the GLC ban on lorries was "unreasonable, irrational and unlawful." The article states that,
in issuing a 'direction' last February that the ban could not go ahead without a public inquiry,
the Secretary of State had "exceeded his powers" under the Road Traffic (Regulation) Act 1984. It adds:
The Minister did not have the power under the Act to force them to hold a public inquiry, said the judge.
This is not the first time that the Secretary of State has been found to be acting in an unlawful, unacceptable and certainly unreasonable manner. We cannot understand why he has not seen fit, even at this late hour, to come to the House not only to apologise for his irrational behaviour, but at least to make it clear that he had no right to attack the GLC in the manner he did.

Mr. John Ward: On a point of order, Mr. Deputy Speaker.

Hon. Members: Sit down.

Mr. Deputy Speaker (Mr. Harold Walker): Order.

Mrs. Dunwoody: What is more, his intention in so doing was totally unlawful. May I remind you, Mr. Deputy Speaker——

Mr. Deputy Speaker: Order. If I could anticipate the further point of order, the hon. Lady should come to her point of order now.

Mrs. Dunwoody: May I ask you, Mr. Deputy Speaker, whether you are aware that the Prime Minister today told American lawyers in London that the desire for justice imposes very firm requirements on the politician?

Mr. Deputy Speaker: Order. The hon. Lady must come to her point of order.

Mrs. Dunwoody: In view of the Prime Minister's statement that
unstinting support for the courts which administer the law and for the police who enforce it
is the first duty of politicians, why cannot the Secretary of State come to the House and tell us why he is behaving in this arrogant and arbitrary fashion?

Mr. Deputy Speaker: The answer to the hon. Lady's point of order is that I have not received any such request.

Mr. Tony Banks: Further to that point of order, Mr. Deputy Speaker. Would it not be in keeping with the traditions of the House that when a serious matter is raised in the courts, once again catching out this ridiculous Secretary of State who is clearly a recidivist, there should be a statement at the earliest possible opportunity? Surely that is something the Opposition can expect.

Mr. Deputy Speaker: The Secretary of State and the Leader of the House have heard the exchanges and will doubtless take them into account.

Mrs. Dunwoody: Further to that point of order, Mr. Deputy Speaker. Is there any procedure whereby the Secretary of State can come here? I am sure that he would welcome an opportunity to make a statement this evening. Can you tell us how to ensure that that happens?

Mr. Deputy Speaker: On a hypothesis, if a request were to be made, the Chair would have to consider it and seek an appropriate moment for the Minister to make his statement. I have received no such request.

Mr. Eric Deakins: Further to that point of order, Mr. Deputy Speaker. Is it possible that the matter is sub judice? I understand that the Secretary of State may be considering an appeal. [Interruption.]

Mr. Deputy Speaker: Order. I know nothing about the judgment. I have heard references to what has been reported in The London Standard, but I prefer to see some harder facts. In any case, it is not a matter for me—nor is the hypothetical question of an appeal. The only issue to which I have to respond is whether I have received a request for a statement to be made, and the answer is no.

Mr. Frank Dobson: Further to that point of order, Mr. Deputy Speaker. While accepting that something in The London Standard is not necessarily a hard fact, it is a hard fact that the Secretary of State and the Leader of the House are here. Are they going to make a statement? If not, are they going to inform you when they intend to make a statement? This is the second time that the present Secretary of State has been held in the courts to have acted irrationally and unlawfully in relation to the GLC. It is time that he came to the House to explain what he is doing.

Mr. Alfred Dubs: Further to that point of order, Mr. Deputy Speaker. Is it possible that the Secretary of State has not yet received the judgment and is awaiting it before coming to the House'? On the previous occasion, legislation was rushed through the House to make legal a previously illegal action by the Secretary of State. The House is surely entitled to know whether that is going to happen again.

Mr. Clive Soley: Further to that point of order, Mr. Deputy Speaker. As a former probation officer, may I offer my services to the Secretary of State? We all make mistakes occasionally. We are all allowed one, but on the second occasion there is an indication that rehabilitation is needed.
We seek your guidance, Mr. Deputy Speaker, on the Prime Minister's comments. She said:
The first heresy is that if only a determined minority gather together"——

Mr. Deputy Speaker: Order. The hon. Gentleman cannot raise a point of order about what the Prime Minister is supposed to have said at a meeting today.

Mr. Soley: I apologise, Mr. Deputy Speaker. The Prime Minister was saying that a minority could not be used to break the law. A member of a minority group—the Government—has been found guilty of breaking the law on two occasions, and that must be a serious matter. We are asking the Minister to give an explanation to Parliament. Having been found guilty before the courts on two occasions, he ought to come to the House and make a statement.

Mr. Ron Leighton: Further to that point of order, Mr. Deputy Speaker. We all support


the rule of law. I wonder whether you could advise hon. Members what they should tell constituents when the courts tell us that the Secretary of State for Transport has twice acted irrationally and unlawfully? How are we to explain to our constituents that the country is being run by Secretaries of State who are clearly irrational and behave unlawfully?

Mr. Roland Boyes: Further to that point of order, Mr. Deputy Speaker. My hon. Friend the Member for Hammersmith (Mr. Soley) underestimates the magnitude of the problem. As a former assistant director of social services, I believe that this is a section 25 job. I shall be consulting my social services colleagues in London to se whether instant action can be taken against the Secretary of State.

Mr. Deputy Speaker: These are not matters for me, and I cannot give advice to the hon. Member for Newham, North-East (Mr. Leighton). The only question to which I have to respond is whether I have received any indication of a wish to make a statement. I have received no such indication. If there is a will to make a statement, no doubt I shall receive a request.

Mr. Dobson: Further to that point of order, Mr. Deputy Speaker. I seek confirmation as a genuine point of order. Further to the suggestion of my hon. Friend the Member for Houghton and Washington (Mr. Boyes), will you confirm that it is not possible under the general law for an hon. Member to be subject to section 25 procedure, except with the written consent of Mr. Speaker?

Mr. Deputy Speaker: I know nothing about section 25. Standing Orders are enough for me to worry about.

Orders of the Day — Oil and Pipelines Bill

As amended (in the Standing Committee), considered

New Clause 1

SECURITY OF SUPPLY AGREEMENT

'(1) The Agency shall have power to enter into agreements, on behalf of the Crown and at the request of the Secretary of State to secure the supply of petroleum and petroleum products.

(2) Such agreements shall include provision that—
(a) the Company with production from the United Kingdom continental shelf shall continue to supply United Kingdom customers with crude oil and petroleum products with at least the quantities supplied over the previous year or contracted to supply over the coming year, and will increase the supply where possible and will use its transportation and distribution system for this purpose; and
(b) the Company will make supplies at the prices ruling at the time of request (or as otherwise determined by law and regulations)'.—[Mr. Rowlands.]

(c) Brought up and read the First time.

Mr. Ted Rowlands: I beg to move, That the clause be read a Second time.
In the 10 sittings and nearly 30 hours of the Committee stage, there was a common thread to our arguments. Our charge throughout the proceedings on the Bill has been that the abolition of the British National Oil Corporation will weaken and undermine many aspects of the security of our oil supplies. We believe that BNOC's control over about 800,000 barrels of North sea oil represented one of the vital means of ensuring our supplies in times of shortage.
The Minister of State, Department of Energy argued repeatedly in Committee and on Second Reading that he had a combination of powers and arrangements to ensure the security of our oil supplies. One part of that combination·and, therefore, a part of the right hon. Gentleman's defence in supporting the abolition of the BNOC—was that he had a series of security-of-supply assurances from the major oil companies, particularly those with refining capacity in the United Kingdom. Therefore, the right hon. Gentleman claimed that he could afford not to activate the participation agreements for six or 12 months.
I asked the Minister on Second Reading about the character of those assurances. He said that he could not give us information at that time, but would consider enlightening us in Committee. However, he said that the assurances from the major oil companies were informal.
The matter was not raised in detail in Committee—the new clause breaks new ground—but we put some sensible and reasonable questions to the Minister about his dependence on those assurances. He told us that he could say no more than he had said on Second Reading, which was very little.
Therefore, we need further advice from the Minister about the nature of the assurances that he has received. We believe that the assurances should be formal agreements with the oil companies. My support for that view was


strengthened when I read an article in today's Financial Times about a letter that might be typical of the assurances on which the right hon. Gentleman is dependent.
The right hon. Gentleman will have seen the report in the Financial Times about the letter of assurance from BP to the Department of Energy. Is that typical of the informal assurances that he holds from the major oil companies? Are they in the form of a letter from an oil company manager to a civil servant at the Department of Energy? The illustration in the Financial Times is not even a letter from an oil company chairman to the Secretary of State for Energy; I do not know whether a letter from a chairman would increase or diminish the strength of the assurances, but it gives us no comfort to believe that the assurances may be only informal letters from oil company managers to civil servants.
The second and revelant question is whether, if the letter mentioned in the Financial Times is a typical example of the assurances, the right hon. Gentleman has received any advice about the contractual strength of those assurances. Would such an assurance be legally binding if a dispute arose about its terms?
Although the letter quoted in the Financial Times is dated November 1983, it may be one of the assurances received by the Minister of State. If it is not, I should be pleased to hear how the Minister has strengthened the assurances. More important, I want to ask the Minister about the terms of such an assurance. In the letter, the assurance is given in very general terms. About the types of supplies being offered in times of shortage or crisis, we are told in the letter that the oil company—in this case, BP—would be keeping customers supplied
in accordance with the relevant contracts and established patterns of business.
If a shortage occurs or there is a potential crisis and pressures grow, those words could mean almost anything to anyone, especially to the oil company giving the assurance. Many of these established patterns of business may involve contracts with terminal dates. There may be very short-term arrangements with the companies concerned. How strong, reasonable and effective would such an assurance be at a time of shortage or crisis?
We also ask the Minister about the reference in this supply assurance letter, if it is still in force, to a total disclaimer on prices. The letter of assurance says that BP
makes the above affirmation subject further to there being no legal or governmental constraint on its ability to raise prices as a necessary means of recovering costs.
It appears that a fundamental condition of the assurance is that, in return, the Government have to assure the oil company that they will make no endeavour to restrain or to restrict price increases in times of shortage. Those phrases cannot be read in any other way. It appears that, in return for a very general assurance about oil supplies, the Government will have to accept that there will be no intervention in the prices that BP wishes to charge during a time of shortage or potential crisis. That is a serious commitment to make in return for the very general assurance offered by BP.
We do not know whether the letter dated November 1983 is the type of assurance that the Minister told the Committee he had. We do not know whether it is out of date. We do not know whether, since that date, the assurances have been strengthened or improved. However, the Opposition wish to register their objection to a general

assurance of this kind combined with a disclaimer, because it does not add up to an effective form of assurance.

Mr. Michael Portillo: During the last supply difficulty that we experienced, the Government attempted to restrain prices and the result was a shortage of petrol. Why is the hon. Gentleman so dismayed that there should be that disclaimer?

Mr. Rowlands: I am dismayed because it seems unreasonable that, when Britain is a large oil producer, there should not be some reasonable relationship between its production and refining capacity and the prices that a company in that position should be able to charge its customers. The House will note the belief of the hon. Member for Enfield, Southgate (Mr. Portillo) in letting the market rip, especially in a period of shortage or crisis.

Mr. Portillo: indicated assent.

Mr. Rowlands: We shall take note of the hon. Gentleman's nod of assent and explain nationally that that is the position of Government Back Benchers, and I think that we are entitled to know whether the Government accept that unadulterated view of the market. Certain differences have emerged between the hon. Gentleman's position and that of the Government on certain aspects of the Bill. It will be interesting to know whether the Minister agrees with his hon. Friend.
We ought to know whether, in return for a general assurance of the kind suggested in the letter, the Government have offered the major oil companies a free-for-all in prices, forswearing any intervention on price increases during a period of oil shortage. I hope that the hon. Member for Enfield, Southgate will at least support me in saying that, in return for these assurances, we should have some knowledge of what is being suggested, and that there will not be a price disclaimer of the kind that was apparently in the BP-Government letter of November 1983.
These are two very important aspects of the so-called informal supply assurances if they are repeated in the other assurances that the Minister has in relation to supply and in relation to a disclaimer of any form of price control, moderation or restraint in times of oil shortage. Is that the combination about which the Minister spoke when he told the House of his front-line defences to ensure the security of our oil supplies?
Towards the end of the letter, I read:
This letter will cease to have effect upon the expiry of the royalty agreement.
Will the Minister explain that a little more? If it is assured that this is the letter of assurance between BP and the Government, will the Minister say what that sentence means? If the royalty agreement between BP and the Secretary of State includes the right of the company to the automatic sale-back of all royalty oil, is that a part of BP's royalty agreement with the Secretary of State? If it is one of the conditions of the security of suppy assurance and it lapses when the royalty agreement lapses, how does that leave the assurance given to the House by the Minister that the new agency will be entitled to manage and trade every barrel of oil? Does BP's royalty agreement with the Secretary of State give the company the right to the automatic sale-back of royalty oil, and is the assurance made subject to this agreement?
On more than one occasion when we have discussed these issues the Minister has said that the agency will have a free and unfettered right to decide whether to manage and trade in royalty oil as opposed to giving an automatic sale-back provision to the major oil companies. Again, the House has a right to know about these so-called informal assurances.
In the absence of any trading in participation oil by the new agency, because the agency will have only a limited trading role, these assurances play a much greater part than they would have if we had had an agency active in trading in any significant way in crude oil through its participation agreements.
The new clause states that agreements relating to security of supply must be binding, contractual arrangements, not informal letters to civil servants from the managers of an oil company. In other words, they must be contractual agreements having the force of law. While it would be question of negotiations between companies and the Government, the new clause states that security of supply agreement must be specific rather than general. An agreement in the terms of the letter which I have quoted from the Financial Times would not do. That is why the new clause says in subsection (2)(a) that a company
shall continue to supply United Kingdom customers with crude oil and petroleum products with at least the quantities supplied over the previous year or contracted to supply over the coming year, and will increase the supply where possible and will use its transportation and distribution system for this purpose".
That would be more specific than the waffly words contained in the BP letter. It goes on to place an onus on oil companies to promote and, where possible, increase supplies to the United Kingdom.
Such obligations on oil companies are not unreasonable, because those companies have major interests in our North sea fields. It would be incomprehensible to the general public if those companies did not respond in the most positive way on behalf of United Kingdom customers at times of shortage. We are not adamant about the wording of the new clause. If the Minister accepted the principle involved, we should be willing to accept an alternative form of words.
The new clause adds in subsection (2)(b) that there should not be a free-for-all in the way that the hon. Member for Enfield, Southgate described, whereby the oil companies would be able to exercise their power over the market and, in times of shortage, rip off the United Kingdom customer. To avoid that situation, we say:
The Company will make supplies at the prices ruling at the time of request (or as otherwise determined by law and regulations".
No form of words should restrain the Government from being able to intervene, by law or regulations, on prices during a period of shortage.
The new clause would place proper responsibility on oil companies to endeavour to improve the nation's oil supply position in a period of crisis or shortage. Such a responsibility should be on companies because, as I say, the public would find it incomprehensible should the United Kingdom not be in a better position at a time of oil shortage than are other countries that do not have oil supplies off their shores.
Not only will the United Kingdom be in the oil production business for years to come—the oil will decline eventually; we shall discuss that on later

amendments—but we still do have a large refining capacity. The public would not understand if the nation, producing more than 2 million barrels a day, did not ensure that major oil companies made a special effort to see that we had adequate supplies during a period of shortage.
Let us not forget that BP, Shell and the other major companies have had their way, as reflected by the Bill. I say that because their thinly disguised desire to have BNOC abolished—to remove BNOC as a major oil trader—is conceded to them in the Bill. Therefore, we are entitled to demand more from those companies by way of security of supply agreements than the untried, untested, waffly, informal assurances at which the Minister is clutching and on which he relied when replying to points made by hon. Members in Committee.

Mr. Portillo: The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) sometimes worries me. Although some clear lessons are to be learned from the last 10 years, he does not appear to want to learn them. One is that, between 1974 and 1979, Britain and other western countries responded to the 1974 oil crisis by attempting to restrain oil prices. The result was that we had high inflation, we continued to be heavily dependent on oil and we went through a period of world recession.
In 1979, Britain again tried to restrain the prices of oil products. The result was that in Britain there was a shortage of those products, with queues at petrol stations, whereas other European countries which did not operate restraint had plentiful supplies of petrol—and we were a producer of oil, while those other countries were not.
Since 1979, countries have by and large responded to the second oil shock in a completely different way. They have not attempted to restrain oil prices. Hence, since 1979 our dependence on oil has decreased. We have shown greater efficiency in the use of energy, with the result that in the intervening years we have had falling inflation and enjoyed a period of substantial growth. Today, there is a substantial oil surplus throughout the world, and that is attributable to the fact that countries are less dependent on oil. Even the price of oil has fallen considerably because we have not made the error of trying to restrain prices.
The hon. Member for Merthyr Tydfil and Rhymney wishes to lead us back to the bad old days when we tried to put the lid on prices and when, ironically, we suffered from precisely what we thought we were avoiding—inflation in general and high oil prices.

Mr. Bruce Millan: I shall be brief and will not, therefore, answer the points that were made by the hon. Member for Enfield, Southgate (Mr. Portillo), except to comment that I do not accept his account of what occurred either from 1974 to 1979 or for the period since 1979.
I support the new clause, which was moved comprehensively by my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands). The security of supplies was the major point raised on Second Reading, when the Minister's answers were highly unsatisfactory. Nothing that has happened since then, in Committee and elsewhere, has persuaded me to change my view.
I will not go over the whole question of security of supplies and what might happen when the agreements under the International Energy Agency and Common


Market are activated or what might happen on the activation of participation agreements. That is to be done with such a period of notice that, in terms of meeting a crisis—whether the crisis is beyond or below the trigger point of 7 per cent.—the whole process of reactivating participation agreements is of no relevance.
On Second Reading the Minister described the informal assurances given to the Government by the oil companies. Therefore, he must be embarrassed that the details of at least one of the informal assurances appeared in the Financial Times this morning. On Second Reading he said that he could not tell us any more than he had about the arrangements—and that was precious little—because the details were confidential. They were not sufficiently confidential to prevent them from appearing in today's Financial Times. I do not know how that happened, but I am delighted that it did. At least we now have information about those informal assurances.
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We are entitled to answers to a number of questions about the report in the Financial Times. Is it accurate? Does it give an accurate account of the letter from BP dated November 1983? As 20 months have passed, is that letter still operative? Is it written in similar terms to letters from other oil companies, or is it a one-off letter? If there are other letters—we must assume that there are, and that they are the substance of the informal assurances received by the Government—are they similar to the letter from BP?
I assume that those letters are not legally binding—they could not be informal if they were. On Second Reading and in Committee the Minister said that there were informal assurances. We are entitled to know how far those assurances are binding in the event of a crisis. Why should there not be legally binding agreements for the oil companies, given the circumstances of our North sea oil production? Why should we rely on informal assurances? If the companies are willing to give informal assurances, they can have no objection to having provisions written into legislation.
I shall listen carefully to the Minister's answers to those questions. However, unless there is a legally binding agreement the protection of our oil supplies will be deficient and defective. We must have legislation to deal with that, which is why we have tabled the new clause.
I fully support the new clause, including subsection 2(b) on prices. It is an important part of the new clause. However, if the Government said they were interested in security of supply but that it was not realistic to write a price ruling into legislation that would be fair enough. We could draft another new clause to accommodate that. What is essential is that there should be security of supply and that the Government have legally effective powers to ensure that in times of crisis. Indeed, the ordinary member of the public would find it incomprehensible that, despite our excessive production in the North sea, over our national needs, there should be a shortage in a time of crisis and no binding agreement to ensure security of supply. That would be indefensible.
As BNOC is to be abolished, something must be written into legislation to protect our supplies, and the new clause seeks to do that. If the drafting is not quite right, and if there was an objection to the provision on prices—although I would not necessarily accept the validity of that

objection—it would be possible to write something into the legislation in another place to ensure security of supplies. I strongly support the new clause.

Mr. Malcolm Bruce: The House will appreciate that my hon. Friend the Member for Orkney and Shetland (Mr. Wallace) was very much involved in the Committee stage of the Bill and would have been present today had it not been for circumstances of which the House is aware—that his wife gave birth to a daughter last week. She came out of hospital today and my hon. Friend is properly with her, learning how to change his first nappy. I hope that the House will accept me as a substitute.
I am concerned about the implications of the new clause. The Opposition are understandably concerned about security of supply and the lack of legal force within the existing arrangements. However, the clause attempts to lay down specific circumstances for an unforeseen crisis, yet what will be required cannot be predetermined to the extent envisaged by the new clause. If a crisis involved the stoppage of the flow of oil in the world market, we should wish to retain the oil that we export for ourselves. We could deal with that by producing emergency legislation—something with which the House is perfectly capable of dealing in a spirit of all-party co-operation. That would be a more appropriate way to deal with the problem.
Why is it that the United Kingdom, which accounts for about 1·6 per cent. of the world's oil reserves, accounts for 4·5 per cent. of the world's production? What are the implications of that for the future security of supplies? We are producing oil at a rapid rate and selling it abroad. By definition, the oil sold and consumed now will not be available in future. We should concern ourselves with that aspect.
There is a natural instinct in the Labour party for tight regimentation in this matter. The hon. Member for Enfield. Southgate (Mr. Portillo) put the opposing view, which suggested too much trust in the force of the market to resolve the problem. However, to try to determine something in advance and introduce tight regulation over something that we cannot fully foresee is neither necessary nor likely to be workable.
Subsection 2(a) states:
the company with production from the United Kingdom continental shelf shall continue to supply United Kingdom customers with crude oil and petroleum products with at least the quantities supplied over the previous year.
Some customers might not want or be able to deal with that quantity for internal reasons. The criterion is rigid in the extreme.

Mr. Rowlands: I am sure that the words do not debar the customer from foregoing a supply. Most of the assurances which the Minister is trying to obtain are for times when shortage occurs, but before a crisis. If a customer does not want the oil, the clause does not mean that he must take it.

Mr. Bruce: I am grateful for that clarification, but the clause anticipates circumstances which cannot be anticipated. The one merit in the clause is the recognition that securing crude oil is not a requirement. To the extent that the clause addresses itself to that specific, it is an improvement. It recognises that crude oil being available is no darned good without the facilities to process it. In terms of security, the new clause is an improvement on


previous agreements and participation agreements which Labour Governments wrote into legislation. I am pleased that we are learning.
To be frank, I think that the new clause is proposed because of an understandable resentment about what the Government have done to the British National Oil Corporation. Once the company had been split, the only logical solution was to do what the Government are doing. We might not have agreed, but the Labour party is resisting the solution for sentimental rather than rational reasons. My colleagues and I will not support the new clause.

Mr. Tam Dalyell: An hon. Member can seek leave of the House to speak twice at this stage in proceedings, so I look forward to what the Minister has to say. I was not on the Committee considering the Bill, for reasons of which my colleagues are aware. I have sat on a number of other Bills on the same subject. When Lord Carrington was Secretary of State for Defence in the Government headed by the right hon. Member for Old Bexley and Sidcup (Mr. Heath), he favoured the British National Oil Corporation. That was because he realised from his ministerial experience that it would be impossible to safeguard supplies without some such instrument. That was his view at the time and I do not know whether he has recanted. I think not.
We need to know whether the letter of intent is sufficient. I have two questions to ask about the Financial Times article. First, is it satisfactory that a letter from Mr. David Simon, the head of BP's refining and marketing division, to an Under-Secretary in the Department should give such assurances? Surely such assurances should be given at least by the chairman of the company to the Secretary of State. I am not a great one for protocol but that seems an odd way of proceeding.
Secondly, the article states:
BP makes the above affirmation subject to there being no further governmental constraints on its ability to raise prices as a necessary means of recovering costs.
What exactly is the nature of the quid pro quo?
I have kept my comments short because, after the Minister has replied, some of us might want to ask further questions.

The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith): We have debated this subject on Second Reading and in Committee. I have always acknowledged that the subject causes concern. Security of supply is important to the Government, to the House and to the country. In the changes that we made to BNOC and its functions, and in the changes made when Britoil was formed and in abolishing BNOC security of supply has loomed large. That is why I devoted a large part of my Second Reading speech to that aspect and why we debated certain aspects of participation fully in Committee.
We have made changes because circumstances have changed. The situation is not the same as it was in the early 1970s, either in relation to the oil market or to the structure of the oil industry. The Bill is a reflection of the changes. What might have been appropriate 10 years ago is not necessarily appropriate today.
The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) referred to the Financial Times article. I

read the article with interest. The article must stand or fall on what it says. The arrangements between the Government and oil companies are confidential and I shall not breach that confidentiality. It is not my place to breach such confidentiality and I do not intend to do so. That would be wrong.
Whatever the source of the article, the information did not come from me. I shall not take any part in breaching confidentiality that would have an effect on that company and on other companies with which agreements have been made.

Mr. Millan: What will the effects be on the other companies and on BP? Everybody has read the article and the information is no longer confidential.

Mr. Buchanan-Smith: The matter is straightforward. I am surprised that the right hon. Gentleman, having held a ministerial position, should consider the possibility of discussing confidential matters. If I were to discuss such matters freely in the House and elsewhere, the parties to the agreement would have little confidence in Ministers fulfilling their obligations and responsibilities.

Mr. Peter Hardy: I understand the Minister's difficulty in regard to confidentiality—obviously he does not want to comment in detail on such matters—but he must accept that the terms of the report in the Financial Times give us greater cause for misgiving about the secret undertakings. Will the Minister speak in defence of his arrangement, particularly in the light of his charge that it goes less far than we thought when he told us that the assurances were available?

Mr. Buchanan-Smith: I am certainly prepared to comment on some of the general aspects, but I said that I was not prepared to comment on the specific details of the individual agreements with individual companies. For the reasons that I have stated clearly, I am not prepared to do that.
The right hon. Member for Glasgow, Govan (Mr. Millan) asked about the form of the assurances. They vary from company to company, and there are no two companies in exactly the same circumstances, so there is no standard form of agreement for all oil companies.
The right hon. Gentleman asked about the binding nature of the agreements. He more or less answered his question. Of course they are not legally binding. In 1982, when the matter of the agreements was first made public, it was made clear that the agreements are informal. They are not legally binding, and I have never claimed that they are. Equally, given the relationship that exists over a series of matters between Government and the oil companies, I see no reason and the Government see no reason for believing that in practice those agreements would not be honoured by both parties to them.
I should like to deal a little later with the matter of prices, because it is a fundamental part of the new clause.
The hon. Member for Merthyr Tydfil and Rhymney asked about royalties. He would be correct if what is reported in the article to which he referred could be affected by the new arrangements being made as a result of the legislation. I shall turn in a moment to the relevant contribution of the hon. Member for Gordon (Mr. Bruce). Circumstances change and, as circumstances change, so may agreements with the oil companies change. If, as a result of the passing of the Bill, there need to be any


changes in the agreements with the oil companies, I shall discuss them with the oil companies. We are dealing with a changing situation. The passage of the Bill will create new circumstances. I assure the House that I shall be flexible and reactive to whatever changes arise as a result of the Bill.

Mr. Rowlands: In reading the terms, it appears to be a condition of giving the assurance that the royalty agreement with BP is signed. As I understand the historic position of royalty agreements between BP and the Government, they are for the automatic sale-back of royalty oil. The Minister says now that, in the light of the assurances he has given us, the agency will not be bound by any automatic sale-back arrangements. Will the royalty agreements require revision, and will the assurance fall if the BP does not get its way in the royalty agreement with the Secretary of State?

Mr. Buchanan-Smith: I think that I have made my point quite clear. If changes are necessary, or if agreements are affected as a consequence of the passage of the Bill, obviously each agreement will have to be looked at individually, because there are different circumstances in different agreements. I give the House the assurance that I shall look at those agreements to make sure that they are no less effective, following the passage of the Bill, than they are at present.

Mr. Millan: How can the Minister say that, if they are informal agreements and not legally binding? What happens if an oil company refuses to enter into an agreement? Presumably oil companies are free to do that.

Mr. Buchanan-Smith: It is significant that no company has refused to do so. I shall deal shortly with the principle of the matter and with the reason for having informal agreements of the kind that we have, rather than having them in a more legal form, as suggested by the hon. Member for Merthyr Tydfil and Rhymney and his hon. Friends. It is a fundamental question that we debated to some extent in Committee and are debating again this evening.

Mr. Rowlands: The Minister is always courteous in dealing with interventions. That has been characteristic of the way in which we have conducted our proceedings throughout the Bill. Therefore, I am sure that he will not mind if I intervene again.
The Minister gave an assurance to this House and to the Committee that the new agency will not be bound to give the right of automatic sale-back of oil to any major oil company. It appears from the terms of the assurance that it is tied into a royalty agreement which gives BP the right to an automatic sale-back. Which assurance should we take?

Mr. Buchanan-Smith: I can only repeat what I have said. If there are changes as a result of the legislation, any changes in the agreements will have to be negotiated with those who are parties to them. That has been the character of participation. For example, where it has been BNOC's responsibility, or in relation to other contracts which BNOC has with a non-participation agreement, where on the specific agreement—[Interruption.] The hon. Gentleman cannot have it both ways. He has referred to a report in a newspaper and asked what would arise in the circumstances mentioned there. I cannot go further than I have already. If circumstances arise which affect

agreements, or if any change occurs in relation to a royalty undertaking which has been given, that has to be negotiated with the company concerned.
I do not recommend to the House that there should be a legally binding agreement of the kind suggested in the amendment. The agreement in regard to supply of product and security arrangements is between the government and the oil companies, and not between BNOC and the oil companies. The hon. Gentleman is breaking completely new ground, not only on the formality of the agreement but in regard to the making of an agreement between the agency and the oil company.
Where there is an agreement on security of supply, the Government are the proper custodian of one side of that agreement with the oil company, rather than, as in the past, through BNOC, or in the future through the agency. I shall refer in a moment to why we believe in working on a voluntary basis. It is much more appropriate, in regard to the range and degree of relationship between the Government and the agency, that the responsibility for the agreements on security of supply, whether legally binding or informal, should rest with the Government rather than shifting to the agency.
From a practical aspect, an informal agreement is preferable to a formal one. The hon. Member for Gordon gave the reasons in his speech. All the experience of crises over the past 10 or 15 years shows that it is impossible to predict with any accuracy how a shortage might develop and what our priority needs will be in time of shortage. Therefore, we must have as much flexibility as possible in our understanding with our refiners, so that we ensure that they do everything to supply their customers in the best way possible. It is impossible to write down in a legal form, in the manner suggested by the hon. Member for Methyr Tydfil and Rhymney, the kind of flexibility that is necessary if we are to react properly in a crisis.
8.30 pm
The new clause is a much more rigid approach. Although at first glance it has certain attractions, there could be considerable difficulties if we sought to put it into practice. The provisions might be out of step with the commercial facts of production and distribution. The new clause states:
the United Kingdom continental shelf shall continue to supply United Kingdom customers … with at least the quantities supplied over the previous year".
How could this apply to a licensee with an interest in only one producing field, which had passed its producing peak? Who are the customers of a petrol station? How does one establish the quantities supplied over the previous year? Would there be an obligation to supply someone who had recently changed to another supplier?
Once one follows this rigid approach, attractive though it may seem in some respects, it becomes divorced from the real practice of commerce. It assumes a simpler basis of trading in oil and oil products than is the case in the real world. The hon Member for Wentworth (Mr. Hardy) entertained the Committee for a considerable period by following the chain of a cargo of oil from the time it was produced at the wellhead until it passed through the terminal and was loaded. He regaled us with stories of cargoes being traded 10 or 20 times. That does not apply to every cargo. One simply cannot formalise the practice in this new clause. One cannot try to solidify the pattern of trading after the agreement has been triggered. Entering into such contractual provisions—this is my main


opposition to the new clause—would entail a considerable loss of flexibility. Above all else, we need flexibility.
The new clause refers to prices and to the oil that may be delivered under the security of supply agreement. It would be difficult for any United Kingdom continental shelf producer to agree to a pricing condition other than one that allowed him to receive the prevailing market price at the time of delivery. Any agreement would have to be made on that basis. Indeed, that principle was followed by the last Labour Government, when they introduced participation agreements on the basis that BNOC's transactions should be at no gain and no loss to the corporation or to producers. It is inappropriate to write into the new clause or into any informal or formal agreement any conditions on prices, other than that they should reflect market conditions.

Mr. Rowlands: That is not what the BP letter says. BP's point is very different. It tries to bind Governments not to apply any legal or Government constraint. It makes it a condition of the assurance that Governments will never try to constrain or moderate prices. That proposition is very different from agreeing to a price of the type laid down in participation agreements.

Mr. Buchanan-Smith: The Labour Government introduced participation agreements on the basis that the transactions should be at no gain and no loss. Obviously, this will reflect market conditions. My hon. Friend the Member for Enfield, Southgate (Mr. Portillo) pointed out that, when the Labour Government endeavoured to use their powers with respect to price constraints, supplies subsequently dried up. Because the United Kingdom market cannot be isolated from the world market, eventually there were upward prices in line with market conditions. The only effect of Government action in intervening was to cause a delay, which threatened supplies. I hope that my slightly more pragmatic approach, in comparison with that of the hon. Member for Merthyr Tydfil and Rhymney, in the light of the Labour Government's experience, shows what can happen. The Labour Government did not have a single supply assurance from a United Kingdom refiner. They relied on participation agreements. When the crisis came, it had no effect on the users of oil products and we suffered from shortages.
Because it is better to act informally rather than formally in giving flexibility and, because of our experience during previous crises, I believe that my approach is better than that of the hon. Member for Merthyr Tydfil and Rhymney, and I therefore ask the House to reject the new clause.

Mr. Dalyell: rose——

Mr. Deputy Speaker (Sir Paul Dean): Order. The hon. Member has spoken once in the debate. Does he have the leave of the House to speak again?

Hon. Members: Yes.

Mr. Deputy Speaker: The hon. Member may proceed.

Mr. Dalyell: May I repeat the question that was put first by me, secondly by my hon. Friend the Member for

Merthyr Tydfil and Rhymney (Mr. Rowlands) and thirdly by me again. It is no good simply taking refuge in the confidences in the Financial Times article, which states:
BP makes the above affirmation subject further to there being no legal or governmental constraint on its ability to raise prices as a necessary means of recovering costs.
What is the quid pro quo?

Mr. Rowlands: Will the Minister of State answer the point made by my hon. Friend the Member for Linlithgow (Mr. Dalyell)?

Mr. Buchanan-Smith: I shall put the point simply, as I did earlier. I am not prepared to comment on the particular aspects of agreements with companies as reported in the newspapers. I have pointed out the much broader question of principle—that trying to write in conditions on prices, as the new clause does, has proved in practice to be totally ineffective, especially in the experience of the Labour Government whom the hon. Member for Linlithgow supported.

Mr. Rowlands: We have suffered quite a lot from the Minister's complacency, which he has shown yet again in those remarks. It provides cold comfort to customers or members of the public to realise that when the Minister uses the words "informal" or "flexible", it is ministerial double-think and double-talk, allowing oil companies to get away with wishy-washy assurances of the type that the right hon. Gentleman is clutching—which, when the crunch comes, are scarcely worth the paper on which they are printed. For that reason, I ask my colleagues to join me in the Division Lobby in supporting the new clause, which gives proper and meaningful assurances to customers and to the public in times of oil shortage.

Question put, That the clause be read a Second time:—

The House divided: Ayes 86, Noes 187.

Division No. 273]
[8.39 pm


AYES


Atkinson, N. (Tottenham)
Foster, Derek


Bagier, Gordon A. T.
George, Bruce


Banks, Tony (Newham NW)
Gilbert, Rt Hon Dr John


Benn, Tony
Golding, John


Bermingham, Gerald
Hardy, Peter


Bidwell, Sydney
Hart, Rt Hon Dame Judith


Bray, Dr Jeremy
Hogg, N. (C'nauld &amp; Kilsyth)


Brown, Gordon (D'f'mline E)
Home Robertson, John


Brown, Hugh D. (Provan)
Hoyle, Douglas


Brown, N. (N'c'tle-u-Tyne E)
Hughes, Sean (Knowsley S)


Buchan, Norman
John, Brynmor


Callaghan, Jim (Heyw'd &amp; M)
Jones, Barry (Alyn &amp; Deeside)


Clark, Dr David (S Shields)
Lamond, James


Clay, Robert
Leighton, Ronald


Cocks, Rt Hon M. (Bristol S.)
Lewis, Terence (Worsley)


Cook, Robin F. (Livingston)
McCartney, Hugh


Corbett, Robin
McDonald, Dr Oonagh


Cowans, Harry
McGuire, Michael


Cunliffe, Lawrence
McKay, Allen (Penistone)


Dalyell, Tam
McKelvey, William


Davies, Ronald (Caerphilly)
McNamara, Kevin


Davis, Terry (B'ham, H'ge H'l)
McTaggart, Robert


Deakins, Eric
McWilliam, John


Dewar, Donald
Madden, Max


Dixon, Donald
Mason, Rt Hon Roy


Duffy, A. E. P.
Maxton, John


Dunwoody, Hon Mrs G.
Michie, William


Eadie, Alex
Millan, Rt Hon Bruce


Edwards, Bob (W'h'mpt'n SE)
Miller, Dr M. S. (E Kilbride)


Ewing, Harry
Oakes, Rt Hon Gordon


Fatchett, Derek
Parry, Robert


Fields, T. (L'pool Broad Gn)
Patchett, Terry


Fisher, Mark
Pike, Peter


Flannery, Martin
Powell, Raymond (Ogmore)






Prescott, John
Thomas, Dafydd (Merioneth)


Randall, Stuart
Thompson, J. (Wansbeck)


Redmond, M.
Thorne, Stan (Preston)


Robertson, George
Tinn, James


Rogers, Allan
Warden, Gareth (Gower)


Rowlands, Ted
Wareing, Robert


Short, Ms Clare (Ladywood)
Wilson, Gordon


Skinner, Dennis



Snape, Peter
Tellers for the Ayes:


Stewart, Rt Hon D. (W Isles)
Mr. Frank Haynes and


Stott, Roger
Mr. James Hamilton.




NOES


Alison, Rt Hon Michael
Hill, James


Ancram, Michael
Hind, Kenneth


Baker, Nicholas (N Dorset)
Holland, Sir Philip (Gedling)


Beaumont-Dark, Anthony
Holt, Richard


Bendall, Vivian
Howell, Ralph (N Norfolk)


Benyon, William
Howells, Geraint


Bevan, David Gilroy
Hughes, Simon (Southwark)


Biffen, Rt Hon John
Hunt, David (Wirral)


Biggs-Davison, Sir John
Jenkin, Rt Hon Patrick


Blackburn, John
Kennedy, Charles


Blaker, Rt Hon Sir Peter
Kirkwood, Archy


Boscawen, Hon Robert
Knowles, Michael


Bottomley, Peter
Lang, Ian


Bottomley, Mrs Virginia
Lawler, Geoffrey


Bowden, A. (Brighton K'to'n)
Lawson, Rt Hon Nigel


Bowden, Gerald (Dulwich)
Lennox-Boyd, Hon Mark


Bright, Graham
Lightbown, David


Brinton, Tim
Lilley, Peter


Brooke, Hon Peter
Livsey, Richard


Brown, M. (Brigg &amp; Cl'thpes)
Lloyd, Peter, (Fareham)


Browne, John
Lord, Michael


Bruce, Malcolm
Lyell, Nicholas


Bruinvels, Peter
Macfarlane, Neil


Buchanan-Smith, Rt Hon A.
MacKay, Andrew (Berkshire)


Buck, Sir Antony
Maclean, David John


Budgen, Nick
McQuarrie, Albert


Burt, Alistair
Madel, David


Butcher, John
Malins, Humfrey


Butterfill, John
Marshall, Michael (Arundel)


Carlile, Alexander (Montg'y)
Mates, Michael


Carlisle, Rt Hon M. (W'ton S)
Mather, Carol


Carttiss, Michael
Maude, Hon Francis


Channon, Rt Hon Paul
Maxwell-Hyslop, Robin


Chapman, Sydney
Meadowcroft, Michael


Chope, Christopher
Merchant, Piers


Clark, Hon A. (Plym'th S'n)
Mills, Iain (Meriden)


Clarke, Rt Hon K. (Rushcliffe)
Mills, Sir Peter (West Devon)


Cockeram, Eric
Moate, Roger


Colvin, Michael
Montgomery, Sir Fergus


Coombs, Simon
Moore, John


Cope, John
Morris, M. (N'hampton, S)


Corrie, John
Morrison, Hon P. (Chester)


Couchman, James
Murphy, Christopher


Currie, Mrs Edwina
Neale, Gerrard


Dorrell, Stephen
Needham, Richard


Douglas-Hamilton, Lord J.
Nelson, Anthony


Dover, Den
Neubert, Michael


du Cann, Rt Hon Sir Edward
Newton, Tony


Dunn, Robert
Nicholls, Patrick


Durant, Tony
Normanton, Tom


Dykes, Hugh
Norris, Steven


Eggar, Tim
Osborn, Sir John


Evennett, David
Ottaway, Richard


Eyre, Sir Reginald
Page, Sir John (Harrow W)


Fallon, Michael
Page, Richard (Herts SW)


Favell, Anthony
Peacock, Mrs Elizabeth


Fenner, Mrs Peggy
Penhaligon, David


Fletcher, Alexander
Percival, Rt Hon Sir Ian


Fookes, Miss Janet
Pollock, Alexander


Garel-Jones, Tristan
Porter, Barry


Gower, Sir Raymond
Portillo, Michael


Gregory, Conal
Powley, John


Griffiths, Sir Eldon
Proctor, K. Harvey


Hamilton, Hon A. (Epsom)
Raffan, Keith


Hancock, Mr. Michael
Rhodes James, Robert


Hayhoe, Rt Hon Barney
Rhys Williams, Sir Brandon


Henderson, Barry
Ridsdale, Sir Julian





Robinson, Mark (N'port W)
Thurnham, Peter


Roe, Mrs Marion
Townend, John (Bridlington)


Ross, Stephen (Isle of Wight)
Tracey, Richard


Rowe, Andrew
Twinn, Dr Ian


Ryder, Richard
van Straubenzee, Sir W.


Sackville, Hon Thomas
Viggers, Peter


Sayeed, Jonathan
Waddington, David


Shaw, Sir Michael (Scarb')
Wainwright, R.


Shelton, William (Streatham)
Wakeham, Rt Hon John


Shepherd, Colin (Hereford)
Walden, George


Sims, Roger
Wall, Sir Patrick


Smith, Tim (Beaconsfield)
Waller, Gary


Soames, Hon Nicholas
Ward, John


Speller, Tony
Wardle, C. (Bexhill)


Spencer, Derek
Warren, Kenneth


Spicer, Jim (W Dorset)
Wells, Sir John (Maidstone)


Stern, Michael
Wilkinson, John


Stevens, Lewis (Nuneaton)
Winterton, Nicholas


Stevens, Martin (Fulham)
Wolfson, Mark


Stewart, Allan (Eastwood)
Wood, Timothy


Stewart, Andrew (Sherwood)
Woodcock, Michael


Sumberg, David
Wrigglesworth, Ian


Tebbit, Rt Hon Norman
Yeo, Tim


Temple-Morris, Peter
Younger, Rt Hon George


Terlezki, Stefan



Thompson, Donald (Calder V)
Tellers for the Noes:


Thompson, Patrick (N'ich N)
Mr. Tim Sainsbury and Mr. John Major.


Thorne, Neil (Ilford S)



Thornton, Malcolm

Question accordingly negatived.

Clause 2

GENERAL FUNCTIONS OF AGENCY

Mr. Hardy: I beg to move amendment No. 1, in page 2, line 18, at end insert—
`(1A) In managing on behalf of the Crown pipelines and storage installations the Agency shall prepare a plan to design and construct an onshore crude oil pipeline system to complement the existing system and shall enter into agreements on behalf of the Crown to make the system available to licensees with production from onshore fields on a common carrier basis at a commercial tariff and the system shall include better rail sidings, tank farms and necessary links with offshore producing facilities.'.
This amendment provides for the design and construction of onshore crude pipeline systems, which will complement existing systems and allow the making of agreements with licensees to use the pipelines as common carriers. As the amendment recognises, this would involve rail sidings, tank farms and links with offshore production facilities. It is a sensible amendment; the Minister will recall that it is similar to one that we debated in Committee, although it is not identical. It has more merit than the amendment that we debated in Committee, and the Minister will have had a little more time to consider the wisdom of our proposals.
The amendment is sensible, because it would make a helpful contribution to the nation's transport facilities. The Minister said in Committee that, the building of a pipeline can cause some difficulty, and that the several pipelines that had been built in his constituency had caused him concern as a representative of the local people. However, if he has reflected on the matter since Committee, he will have discovered that, after it has been completed, a pipeline causes much less concern than would many vehicles pounding along the roads in his constituency, to the distress of those who might momentarily have had only a little anxiety about the construction of a pipeline.
If the Minister seeks to maintain the Government's policy of extracting oil as fast as, possible from onshore as


well as offshore fields, he will present serious problems to those who live in the areas affected. On balance, the vast majority of residents in areas where onshore oil has been discovered would wish to swap the prospect of vehicles pounding along their roads for the sensible and peaceful operation of a new pipeline.
I am sorry that the Government have not been more sensitive about such matters. The Minister was hasty in his rejection of our amendment in Committee, and I wish to put this point to him. My constituency is in an area where onshore exploration is proceeding. The Minister will share my view that onshore exploration in such areas is likely to be fruitful. As a Member for one of the large parts of England where oil is likely to be discovered, I would prefer it to be moved by pipeline than on our inadequate roads.
A short time ago, I told another Minister in the Department that I would strongly object to any opencast development in my area, and that I would object even more strongly to attempts to move on the roads in my constituency the material displaced or the coal extracted. Greedy eyes are already considering one site where the roads simply could not tolerate the additional traffic that would be required. If there is opencast development, the material should be moved by rail or by canal, not by road. The same argument applies in the case of the amendment. There is no reason why the roads should be clogged by vehicles moving material extracted from offshore oilfields when we have readily available the silent, efficient and effective pipeline system.
If the Government advise the Oil and Pipelines Agency that it should go ahead with extensions to the pipeline system, this could lead to substantial industrial orders and to many jobs. I hope that that point has not escaped the Minister's attention. The amendment does not state, although perhaps it should have done, that the jobs created would be largely within British industry. We recognise that, at last, the Government have begun to realise the enormity of the unemployment problem in many industrial areas, and such orders would be welcome and timely. There would be substantial benefits in the transportation of the product and, in the long run, for the environment, and the provision of jobs through orders to the steel and engineering industries, at a time when such jobs are needed desperately.
Since, this year, the Government will receive £12,000 million in direct revenues from our oil activities, the Opposition believe that some of that money could be invested in Britain. We would commend such valuable investment. The Government tend to boast that the oil revenues have allowed us to buy substantial assets abroad. Earlier this year, after calculating that we had received £50,000 million in direct revenues from offshore oil, I asked the Prime Minister during Question Time what benefit we had obtained from it. The Prime Minister's response was that we had enormously increased our overseas portfolio. When she was asked a similar question the other day, her answer had shifted a little. It should shift much more, and one way to shift it would be to devote some of the revenues to establishing a pipelines system that could benefit Britain for a long time.
In Committee, the Minister boasted of how much money had been invested in our existing pipelines. Although it is not as colossal a figure as the investment in

some of the projects which the House debates from time to time, the sums involved are substantial. In 1980–81, we invested £2·47 million; in 1981–82, it was £1·87 million; in 1982–83, it was £2·6 million; in 1983–84, it was £3·65 million; and in the last full financial year, the figure was £4·32 million. Those substantial sums would provide more benefit if our existing pipelines were complemented by links to the onshore fields. We do not rule out additional links, which are entirely justified, to ensure that the onshore and offshore fields are complementary.
The Minister must recognise the merit of our proposal. It would provide jobs and a cleaner and healthier environment, and it would please the Select Committee. If the Minister recognises the merit of the consideration of the Select Committee, he will realise that the Select Committee appears to be recommending that there should be improved storage facility and investment, and the amendment would certainly fit well with the Select Committee's relatively recent recommendation.
I hope that the Minister will not dismiss as unimportant our concern about unemployment, the environment and transport. He may feel assured that the Government's docile and substantial majority in Parliament will allow him to continue to reject our logical and intelligent pleas with impunity, but I rather think that in another place there will be concern for the environment and employment which adds grace to that establishment, but which, if ignored in this House, is particularly regrettable since we are supposed to be the democratically sensitive establishment. We are perhaps relieved of the problem and responsibility of taking the longer and more relaxed view, which is often the characteristic of their Lordships. Here we are entitled to discuss realities. The reality of the situation is that the sheer common sense of the amendment deserves consideration.
9 pm
It may be that the Government Whips have persuaded their hon. Friends to stay away in order that they shall not be exposed to the sanity of our suggestion. The Minister smiles enigmatically, as is his wont, but I should not be surprised if that were the case. I trust that the shock which we had in Committee when the Minister rejected our argument will not be repeated tonight. The Minister is aware that the private sector recognises merit in the pipeline system and in its extension.
He recognised in Committee, and I hope that he will again tonight, the wisdom of the extension of the link which Mobil is now establishing to the terminal at Wymondham in Norfolk. Mobil was serving Mobil's interests, but in fact it was serving British interests as well because it is much more sensible to invest in this way to make the movement of oil efficient without causing social and economic disadvantage. Now that the Minister has had a few weeks for reflection, I hope that he will realise that the Wymondham development by Mobil is one which should be extensively repeated. We would certainly wish this to be so. In that regard, I remind the Minister that we put this proposal forward as a demonstration not only of our belief in sane arrangements in transport and industry but because we believe that there is a substantial place for co-operation in the economy between the public and private sectors. The example of the Mobil development in Norfolk should be repeated. I think that we can justly


claim that our approach is entirely undogmatic and that, if there is dogma in these matters, it rests firmly wholly on the Government's shoulders.
On this occasion I hope that the Minister, perhaps in preparation for consideration of the Bill in their Lordships' House, will recognise the powerful arguments in support of our amendments and, for a change, will consider accepting them.

Mr. Bruce: I am not sure what the Minister is going to make of this proposal. I yield to nobody in my willingness to resist the Government's economic policy and to criticise many aspects of their oil and gas development policy. I started out on my political career by standing against the Minister, and I like to think that I have done a little better since then.
I do not think that, in the course of trying to be constructively critical of the Government's performance, I can be expected to support what seems to me a barmy idea. I wonder what kind of impetus is coming from within the oil and gas industry to give rise to this kind of proposal. I certainly agree that we want to look for co-ordination of development, and I would welcome proposals to extend that. However, I am puzzled as to how one can integrate the onshore industry with the offshore industry, which is completely different in geography, scale and location; and where the pipeline is going to or from is a mystery to me.

Mr. Hardy: I recognise the hon. Gentleman's difficulties. He is standing in for his hon. Friend the Member for Orkney and Shetland (Mr. Wallace) at short notice. If he had prepared for the debate, he would have been able to obtain from his hon. Friend the map of the pipeline system. On it, as on the various public documents available, he would have seen where the offshore fields are or are likely to be. He would have noticed that the location of the offshore fields in the area of Wessex is not very far from existing pipelines—perhaps those which have facilities at Hamble. Is the hon. Gentleman aware that, in Committee, his hon. Friend voted alternately with us and with the Government? My impression is that, having supported the Government on new clause 1, he will support us on amendment No. 1.

Mr. Bruce: I am grateful to the hon. Gentleman, but I am capable of making up my own mind about the merits of the amendment. I gave way in the hope that he might answer my question. Where is the driving force in the industry about the benefit that it would get from the integrated development that the amendment appears to propose? I still wonder whether it is being suggested that we should pipe oil from Wytch farm to Hound point or even to Sullom Voe.

Mr. Rowlands: The hon. Gentleman does know where the pipeline is.

Mr. Bruce: The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) is pushing his luck suggesting that an hon. Member from the Aberdeen area who has been connected with the oil industry does not know where the pipelines are. I am well aware of where the onshore pipelines are. It is sensible to co-ordinate development of new pipelines and to take account of our new requirements when giving annex B approval. However, it is extravagant to suggest that the agency must prepare a plan to design and construct an onshore crude oil pipeline system.
British Gas and BP were interested in an integrated gas gathering system. Those of us who supported the system

were encouraged because plenty of people who knew a great deal about oil and gas development felt that the project was worth while. Movement came from within the industry rather than at the whim of a political party. The project did not go ahead, but it was always a sensible idea. The Government would not have considered it so closely if they had not recognised its considerable merits. However, I am not aware of any serious suggestion in the industry for an approach such as this.
The Labour party must show that it is not determined to regulate the industry for purely bureaucratic reasons. It must also show that it recognises that people in gas and oil production are professionals with considerable experience and with whom they should work in partnership. I understand that, in spite of the bold words of the hon. Member for Wentworth (Mr. Hardy), the amendment will not be pursued to a Division. The Labour party would be wise not to press it.

Mr. Buchanan-Smith: I am not aware of any pressure in the industry for this type of pipeline. When considering annex B development plans, I consider the pipeline implications and the terminal implications. Proposals and decisions are commercial, but the structure must be thought out sensibly.
The hon. Member for Wentworth (Mr. Hardy) has previously, and generously, acknowledged that I am deeply concerned about the employment potential of our oil industry. He has credited what I have tried to do since coming to this office to ensure that benefits are ploughed back in employment opportunities in the United Kingdom.
Equally, I hope that the hon. Gentleman will accept that offshore fields, to which the amendment refers—I must emphasise that—involve environmental factors. That was one of the major reasons for introducing a new licensing procedure for onshore development and exploration in the past 12 months. No scheme will please everybody, but the new scheme has been generally welcomed by both oil and environmental interests seeking a better balance between the two. I am sensitive to those points.
The amendment concerns crude oil from onshore fields, which, as the hon. Member for Wentworth said, can be transported in a number of ways, one of which is by pipeline. I hate to have to disappoint the hon. Gentleman again, but I question the relevance of the amendment to the Bill. We must remember that the Government's pipeline system was originally constructed to supply military airfields owned by the Government with the materials essential for wartime use. Therefore, the Government did not have then, nor do they now, any strategic interest in crude oil pipelines. I could not see such a pipeline servicing Government-owned establishments, as I am not aware of any that are using crude oil.
Therefore, decisions on how oil is disposed of, or transported from, a particular onshore development are the responsibility, with proper respect for planning and environmental considerations, of those who are concerned with the commercial development of the particular oil accumulation. If the licensees decide that the pipeline is appropriate, it would be for them to construct and operate it. I do not see any justification for involving the public sector, and in particular the Oil and Pipelines Agency, in owning or financing such pipelines.
Those are fundamental objections, but there are some practical ones as well. I endeavour to be practical in


dealing with amendments, as I was in Committee. Amendment No. 1 refers to an onshore crude oil pipeline that is complementary to the existing Government pipelines and storage systems. However, as the existing system transports products and the one envisaged by the amendment would convey crude, it is difficult to see how the two could be regarded as complementary. However, if any part of the Government pipeline became redundant and if it appeared that it could be used by the licensee of an onshore oil production field and was appropriate for crude oil, I would expect the agency, as the managing agent of the existing system, to do what it could to facilitate such a change of use.
Despite the speech of the hon. Member for Gordon (Mr. Bruce), the amendment is not clear about where the pipelines should go once they have left the onshore fields. I imagine that the licensees would want to connect them to existing pipelines, to refineries or to port loading facilities. The amendment suggests that the pipelines should be linked with offshore producing fields. However, as the major onshore fields such as Wytch Farm and Humbly Grove, two of the bigger ones, are in the south of England and the major offshore fields are in the north of Scotland, it is difficult to see what purpose would be served by constructing such an extremely long pipeline.

Mr. Hardy: The Minister of State's Department has produced an attractive document about British onshore reserves. It shows that the prospects for oil extraction in Britain cover not merely the Wessex area but a large part of the area on the western side of the Bristol channel. It is a pity that illustrations cannot be used in the Official Report, but this illustration shows that the prospects stretch right up into Lancashire on the western side of the Pennines and include a large part of Lincolnshire stretching right across to Northamptonshire and a considerable part of Yorkshire, stretching to Teeside. This means that the Teeside facilities for the oil industry could link in very well with the extraction of oil from the Yorkshire and Humberside region. We are taking a longer view of oil extraction than the hon. Member for Gordon.

Mr. Buchanan-Smith: I am glad that the hon. Gentleman takes such a long-term view, but I hope that he realises that the map he is holding represents what we know on the basis of geological knowledge, not what we know on the basis of drilling. I am referring to the areas where we are producing onshore oil. Many people would like oil to be produced in commercial quantities in some of these other areas too, but where work has taken place the results have not been quite so optimistic as the hon. Gentleman is and as I should like to be. I have to be realistic and to look at these matters in a practical manner.
For these reasons, I am anxious that the Government's pipelines system should be used as sensibly as possible. Again I pay tribute to the British National Oil Corporation for the way it managed the system. In recent years it has increased the commercial use of the pipelines system, but it has always borne in mind the fact that it has a fundamentally strategic use and that its full capacity has not been needed. The agency will, I am sure, encourage the use of the pipelines system for commercial purposes. To try to stretch a crude oil pipeline as opposed to a

product pipeline to one that services crude oil from onshore fields is not, attractive though in some respects is the hon. Gentleman's proposition, one that lies properly with the functions of the Government's pipelines system either as it has been in the past, as it was recently under BNOC or as it will be in the future under the agency. For those reasons, I ask the House to reject the amendment.

Mr. Dalyell: I want again to ask for the leave of the House to put a question. I should like to hear what the Minister of State has to say in reply to it. I have to declare a strong constituency interest in the matter, not only because of the experience of Hound point, which was offshore, but because the whole pipe-laying exercise was so traumatic for some of my constituents and caused problems in particular for smallholders. As a Scottish Member of Parliament, the Minister knows about these problems. Furthermore, there are possibly oil deposits in the Bathgate area of Livingston.
In a previous incarnation the Minister had experience of the Scottish Office. To what extent will these be strategic planning matters for Government Departments to what extent will they be left to commercial interests? This is a very important issue. I listened carefully to the Minister and if I have misunderstood him, I apologise. My impression is that these decisions will be made by commercial interests, and hang the rest of us. I hope that that is not true.

Mr. Buchanan-Smith: By leave of the House, Mr. Deputy Speaker, I will answer the points raised by the hon. Member for Linlithgow (Mr. Dalyell). I can assure him that nobody is more sensitive than I about the laying of pipelines. The hon. Member for Gordon (Mr. Bruce) will bear me out when I say that within its small physical confines my constituency probably contains more pipelines than the constituency of any other hon. Member of Parliament. If, for the sixth time, certain landowners have a pipeline running through their land it can be a very traumatic experience. Both my Department and local authority departments are sensitive about this matter, and I take to heart the hon. Gentleman's point.
All onshore oil exploration and production is subject to the licensing procedure of my Department. As I said earlier, those procedures have recently been totally reviewed and a new system introduced to provide better safeguards. That will be welcomed as an improvement on the situation which existed before. Looking at it from the industrial and economic point of view, ultimate control rests with my right hon. Friend the Secretary of State, who grants the licences. The exercise of the licensing policy is discussed with my right hon. Friends in other interested Departments and we take a strategic view in relation to it. It is not just a narrow commercial view. The proposals and applications come from commercial interests, but the system is subject to licensing and licensing control, and the performance of the licences is monitored.

Mr. Dalyell: The Minister will forgive me for being parochial, but for the Livingston-Bathgate situation may we have an undertaking that at an early stage the two hon. Members concerned—my hon. Friend the Member for Livingston (Mr. Cook) and I, and indeed the regional council and the district council—will be taken into the confidence of those doing the strategic planning, because


last time round a great deal of hassle would have been saved if we had been consulted at an early stage, especially in relation to the compensation of some constituents?

Mr. Buchanan-Smith: As I said to other hon. Members who have an interest in exploration or production licences in their constituencies, I am very happy for them to come and discuss these matters. If the hon. Gentleman wishes to follow that up he may do so, should the appropriate stage arise. As the hon. Gentleman may know, just a few weeks ago I announced under the new procedures the first onshore licensing round. Applications have been invited and that round will close towards the end of September. From then on we shall he examining the applications, and thereafter we shall be making an announcement about the awards. If, when the awards are announced, the hon. Gentleman finds that his constituency or that of his hon. Friend is affected, I shall be happy to meet and discuss with him any aspect he wishes to discuss.

Mr. Dalyell: Thank you very much.

Mr. Hardy: We shall not press this matter to the vote. Before the withdrawal of the amendment, could I say to the Minister that, as a result of his constituency experience, there may well be a stronger case for integration in the development of pipelines than seems to have been the case in his own area? I recently saw a pipeline, not for oil, built through my constituency and it was obvious that we manage things very much better in north Yorkshire than they are managed in the right hon. Gentleman's constituency in Scotland.
One of our major concerns was the position of the smaller companies in the round of licensing to which the Minister has referred. Over the months, if it becomes obvious that, in the national interest or in the interest of the small independents, pipeline facilities should be provided, I hope that the Minister will not, out of a sense of dogma, prevent the Oil and Pipelines Agency from applying its ability and experience in the national interest. I hope that he will recognise that its experience is substantial and should be made available and not denied simply because the Minister has remarkably little faith, even in his own Department's publications, but a great deal of dogma.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2

GENERAL FUNCTIONS OF AGENCY

Mr. Rowlands: I beg to move amendment No. 2, in page 2, line 18 at end insert—
'(1A) Agreements entered into under subsection (1) above shall include the provision that the Agency shall lift royalty oil in the relevant chargeable period or where it is unable to do so no later than the end of the following chargeable period.'.

Mr. Deputy Speaker: With this, we may take amendment No. 4, in page 2, line 18 at end insert—
`(1A) Agreements entered into under subsection (1) above shall include the provision that, at the request of the Agency, on behalf of the Crown and after consultation with the Secretary of State, the Operator shall reduce production in the field by—
(a) the amount that would otherwise have been supplied to the Agency on behalf of the Crown as royalty oil; and
(b) an equivalent amount of petroleum that would otherwise have been supplied to the licensees

such amounts to be left in the ground and the operator shall not produce such petroleum until requests to do so by the Agency, on behalf of the Crown and after agreement with the Secretary of State.'.

Mr. Rowlands: Although the two amendments are being taken together, the only thing that they have in common is a reference to royalty oil. I divide my contribution into two parts and I hope that the Minister will do the same when he replies. The debate will be better if we do it in that way.
Amendment No. 2 picks up a substantial issue which I raised in Committee and which does not arouse partisan feelings. I drew attention in Committee to the difficulties that the OPA may face in managing royalty-in-kind oil. Provisions governing the collection of royalty oil dictate that the agency must take all its entitlement within each six-month chargeable period. If it does not collect the oil within six months, it forfeits the right to collect, and royalty oil is paid subsequently in cash.
Collecting royalty oil within the chargeable period was a problem even for BNOC. I understand that the lifting of royalty oil is a shambles. Irrespective of our views on other aspects of the Bill, we all wish the agency to be as efficient and effective as possible in managing and trading oil. The problem will arise for the OPA if, in any six-month period, the amount of royalty oil does not justify sending a tanker to collect it. The problem was less serious for BNOC, because it could aggregate royally oil, participation oil and commercial oil to make up a decent cargo. Therefore, in most cases, it was able to collect the royalty oil on behalf of the state.
The OPA will not have the other sources of oil to make up a decent cargo. We tried to persuade the Minister of State to give the agency a more expansive role and allow it to enter agreements to purchase commercial oil, but the right hon. Gentleman turned his back on that. Therefore, the agency will face difficulties and the shambles involved in collecting royalty oil at present will get worse.
Amendment No. 2 suggests that there should be a rollover period, in which royalty oil that was not collected in one six-month period could be rolled over into the next period and help to make up a decent cargo so that the oil could be delivered to the market efficiently. The amendment proposes a system which I gather is the practice in Norway. It offers a practical solution to what will become an increasingly difficult problem for the agency. How does the Minister think that the agency will be able to handle that problem?
Amendment No. 4 raises a different issue connected with royalty oil. I touched on it briefly in Committee. Amendment No. 4 suggests that we should have the power to bank royalty oil. That is an option which should be available to the Government, especially if trends in the market make it commercially and nationally sensible. Here we could be looking at a different scenario from the one that we discussed earlier or the one that we may discuss on Third reading, when we could be facing oil shortages.
9.30 pm
In the coming months, we could see a dramatic fall, even a free fall, in crude oil prices. It is being talked about widely in oil circles, and the shambles that OPEC is in fuels the speculation that there could be a substantial if not a free fall in prices. If a substantial fall occurs, it will have conflicting impacts on our economy. Many aspects of a


substantial fall in price could help to develop our economy, but they will also raise genuine questions of oil production policy.
In such a case, would it make much sense to drain as rapidly and as rapaciously as possible our largest, cheapest but declining oil supplies from the Ninian, the Brent and the Forties, or would it make more sense to leave the oil in the ground until a better price could be obtained? It might make honest, commercial common sense to bank a percentage of the oil, especially that in the most mature fields in the North sea. It might also serve as a modest form of depletion policy.
Banking our royalty oil in the mature fields would have no consequence for the development of our new fields. It would have little or no major effect on jobs in the exploration for and development of new fields. Therefore, I am interested to know whether the Minister has any thoughts about banking royalty oil.
Since our Committee stage, the issue of banking royalty oil has been raised. I read with interest in the Daily Telegraph of 1 July the report of an interview between Mr. Roland Gribben and Mr. Peter Holmes, the new chairman of Shell Transport and Trading. Mr. Holmes said:
Lower oil prices are bad news for Britain but if Britain could it should be doing something like banking royalty oil.
We do not necessarily agree with his concept that lower oil prices are bad for Britain. We have heard conflicting views about the impact of lower, stable or higher oil prices on our economic and industrial prospects, but the issue of banking royalty oil will again be raised if we see a substantial fall in prices. Although I do not wholly subscribe to the view of the chairman of Shell Transport and Trading, there may be a case for the Government at least to have the option of banking royalty oil.
If that decision is taken, there may also be a case for saying to the oil companies that if royalty oil is to be banked they, too, must bank oil barrel for barrel. In a period of dramatically falling oil prices, there might be a simple, common-sense, commercial reason for the Government to consider banking royalty oil and asking North sea operations to do the same barrel for barrel.
That is the idea that we float in the amendment. The amendment also gives us the opportunity to ask what powers the Minister already has to bank royalty oil. Would it require new legislation to do it or would it simply be the subject of sensible, commercial negotiation and temporary arrangements between the oil companies and the Government?
Given the speed with which oil markets change and trends in development occur, it might not be a bad idea for the Government to have the option which the amendment would provide and which, to borrow some words from the Minister, would be flexible, pragmatic and sensible.

Mr. Bruce: I intervene briefly, if only in the interest of being even-handed and to let Labour Members know that I do not just have it in for them tonight. There is some merit in the amendment. It is flawed in its drafting, as the hon. Member for Methyr Tydfil and Rhymney (Mr. Rowlands) acknowledged. He moved it as a constructive contribution to considering how we handle royalty oil in the most flexible way in the national interest.
The amendment raises a wider issue, to which I referred earlier—the extent to which we are overproducing oil,

in the sense that the United Kingdom has 1·6 per cent. of the world's reserves and is producing 4·5 per cent. of the world's production. Do we have it wrong, or do others have it wrong?
To the extent, therefore, that the amendment represents a sensible contribution in considering how we might be more flexible in the use of royalty oil, and perhaps help to modify production in a way that is acceptable—we are, after all, referring to the Government's oil—the Minister might consider whether what is proposed, or a variation of it, is worth exploring in terms of an extra option which the Government might wish to employ in future.

Mr. Dalyell: We must be flexible about onshore production. In what was my constituency is the town of Bo'ness, which is a mining area containing a number of shafts where subsidence problems in recent years have proved extremely serious. Houses were built on ground which, because of coal production, has since proved to be unstable.
So much for coal. Some people are concerned about what the extraction of onshore oil may mean in built-up areas, and at this stage I register a constituency concern, though I wish to broaden the consideration of an aspect of oil production.
I heard recently, as did many of my hon. Friends, of worries that had been expressed about one of those great glories of medieval English architecture, Salisbury cathedral. I gather that the great spire of the cathedral is built on a base which, along with the chapter house, has a depth of only 4 ft. It is a marvellous engineering construction. In view of the proposal to extract oil in the Salisbury area, I am told that the friends of Salisbury cathedral believe that there could be sufficent destabilising of the surroundings to render the spire dangerous. I do not wish to exaggerate the point, and I put it no higher than that. Reports are available. Should the Department wish to inquire into the matter, it could undoubtedly obtain more facts.
How flexible are the environmental arrangements if it is found that the extraction of oil would create environmental hazards to what we might call the built-in environment? I do not know whether tonight, in considering this amendment, is the right time to raise this issue. It is clear that a substantial and major problem has arisen and that thought will have to be given to it.

Mr. Buchanan-Smith: While the hon. Member for Linlithgow (Mr. Dalyell) acknowledged that the point he raised was not wholly relevant to the amendment, I appreciate its importance. Every aspect of the application for production with which I am concerned is subject to the full rigours of planning conditions, and at that stage the considerations that he mentioned would be taken into account. I will send him information which may help to describe the procedures that must be gone through and which, I hope, provide the necessary safeguards in such a situation.

Mr. Dalyell: It might be found that the geological knowledge was incomplete. In any event, conditions can alter. What would the Government do if permission were given in good faith by all the parties concerned and it was later found that the geological conditions were such that the built-in environment was threatened?

Mr. Buchanan-Smith: Of course, planning permission can be given subject to certain conditions where special considerations might apply. I shall certainly give the hon. Gentleman more than an outline of the exact procedures involved. I hope that that will be of some reassurance to him, but, if not, he is welcome to come and discuss the general issues with me.
The two amendments are important and interesting, and I do not fault them on any drafting ground. The intention behind them is quite clear. I wish first to deal with amendment No. 2 and then to move on to amendment No. 4, because they raise two separate points.
As background to the matter, it is important to understand the Government's right to take royalty oil, which arises from the conditions of the model clauses under which licences are granted. Therefore, if we wish to change the manner or timing of the taking of royalty oil, it is necessary to amend the appropriate model clauses. It would not be possible to amend the contractual relationship between the Secretary of State and licensees by inserting provisions in an agreement between the Secretary of State and the agency, as the amendments seek to do.
The agency will have no contractual or any other entitlement to lift royalty in kind. It will do so as the Secretary of State's agent. I mention that not in any way to knock down the principles behind the amendments, but because it is important to get that perspective right in relation to their practical application. We discussed the principles underlying amendment No. 2 in Committee on 18 June. The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) said that there could be problems with roll-over entitlements of royalty going from one chargeable period to another. However, he was wrong to say tonight that the whole of royalty oil is in a shambles—it is not. I acknowledge that there can be problems on roll-over, but not to the extent of disadvantage suggested by the hon. Gentleman. The problem has been with us for some time and BNOC has largely overcome it. I believe that the agency should also he able to overcome it.
In practice, when BNOC has accrued a substantial portion of a cargo of royalty oil near the end of a chargeable period, it has been able to purchase oil from other licensees to make a whole cargo, which it has then been able to lift. There is no reason why part cargoes of royalty in kind should not continue to be aggregated with part cargoes of crude accruing to licensees in the field, either through the agency purchasing the latter—which is why we proposed that the agency should have powers to trade on its own account—or by selling the part cargoes of royalty in kind to the other licensees. There are practical ways in which the agency should be able to deal with that.
It is important to get in perspective the scale of the issue that we are considering. If royalty-in-kind oil could not be aggregated with other oil to make complete cargoes, my Department has made estimates that indicate that royalty in kind oil not lifted would currently be less than 0·4 per cent. of United Kingdom continental shelf production, so the gross scale of the problem should not be all that great.
However, I acknowledge that aggregation has given rise to problems in the past and could give rise to problems in future. I assure the hon. Gentleman that if operational difficulties arise in aggregating part cargoes in the way that I have described, I shall consider the issue again when other changes in the model clauses—which are the

correct way to deal with this matter—are next considered. We have no intention that this should be a difficulty, nor do we want it to be a difficulty. There are practical ways around it.
Amendment No. 4 is more fundamental and I cannot accept it. If we have to use the depletion power, the Secretary of State should have the right to use it, not the agency. If it were decided to impose cuts, the responsibility should rest with the Secretary of State.
9.45 pm
It might be helpful if I clarify the Government's depletion policy. The United Kingdom is not able to influence the world oil market through the manipulation of the volume that it produces. We are a medium-sized producer. We produce about 2·6 million barrels a day compared with the United States, which produces 10·5 million barrels, and the Soviet Union, which produces about 12·5 million barrels. We export about 1 million barrels a day net. Any reduction that we made would have little effect on the global oil market.
Anyone who has studied OPEC members or other oil producers will know that any reduction that we made would almost certainly be taken up by others. Any move to cut production would result in clear losses. I am uncertain that we would benefit.
I say that because of the practical and physical nature of our offshore production in the North sea and other areas on the continental shelf. Given the high risk and high cost nature of our production compared with most other offshore areas, and certainly with the big onshore producers, companies would be less inclined to invest in the future if the Government were to restrict production arbitrarily.
One could argue that the arrangement proposed in the amendment puts more of a financial burden on the nation's oil revenues and therefore less on oil companies' returns. However, one must remember that whatever is put in must come out. That applies to any stockpiled commodity. If we are to regain the royalty oil in due course, production would have to be cut to make way for its production. Our production is small in world terms, particularly our production for export. United Kingdom production is soon likely to decline. Our production facilities are designed to produce according to profiles agreed with the Department, and after careful study of the characteristics of the reservoir and other matters. Therefore, any cut in current production would, of its very nature, interfere with those carefully designed plans and could lead to production being prolonged beyond the design life of the facilities, and in those circumstances could be lost for ever. That is a peculiar feature of the offshore developments in the harsh environment that we have. Some of those who talk about depletion sometimes ignore the physical nature of the production from our offshore industry.
I would not, for the reasons that I have given, be happy to accept the amendment, not only for technical reasons but as a matter of principle. For certain fields, the powers that the hon. Gentleman seeks in his amendment would cut across other assurances that have been given, and understandings that have been reached between licensees and my Department during the consideration of development plans. In any case, if we ever wished to restrain production, the necessary powers to do it would be available under the model clauses. Therefore, powers along the lines of the amendment would not be required.
I repeat the point with which I opened the debate. If we were contemplating such powers, which we are not, they should be exercised by the Secretary of State and the Government and not by the agency.
I hope that this useful debate has helped to explain Government policy and to put into perspective the reason for the policy. In those circumstances, the hon. Gentleman may not feel it necessary to press the amendment.

Mr. Rowlands: In view of the way that the Minister responded to amendment No. 2, I accept his assurance that he will look closely at the situation as it develops in the practical way that I suggested.
On amendment No. 4, I have a sneaking suspicion that before too long it may be the oil companies themselves that will be coming to the Government to suggest ideas along the lines that I raised. I shall just wait and watch this space.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Buchanan-Smith: I beg to move, That the Bill be now read the Third time.
We have had good and long debates on the Bill on Second Reading, in Committee, and tonight on Report. I pay tribute to my hon. Friends who have supported us throughout proceedings on the Bill. I also pay tribute to Opposition Members—particularly those who have led for the Opposition—for a useful series of constructive debates in an important area of our economy and on very important issues. I am grateful for the generally constructive way in which they have approached the subject, although I have not always been able to respond by agreeing with them.
To go back to where we started, what we are doing in the Bill is very much based on a change in the structure of the world's oil market. It is that change in the structure and what is happening in the world of industry, business and commerce that caused my right hon. Friend and myself and the Government to look at the activities of BNOC, and particularly its main activity in the trading of participation oil. We were forced to the conclusion that, because of those changes in the market, the corporation had reached the end of its useful life.
I emphasise that the abolition of the corporation does not represent an application of any degree of dogma to the public sector. Rather, it represents the flexible way in which we have endeavoured to respond to the change in market circumstances. At the same time, it provides for a welcome reduction in the size of the public sector, where interference was not needed, although I think that Opposition Members have acknowledged that I have not sought to make that a major part of my arguments in the debates on the Bill.
This has been a useful debate. We have again debated the question of security of supply in times of shortage, a subject to which I attach great importance. If necessary, the agency can exercise certain powers. In our arrangements in relation to participation agreements, international matters and refineries, we have ensured that we retain all those important powers.
In recent years BNOC has been successful in operating as a pipelines agency. I hope that the work of the Oil and Pipelines Agency will carry on and be commercially successful.
I hope that the agency's work will prosper. BNOC has shed all its pure participation supplies in co-operation with the licensees. It has shed also, with their co-operation part of the supplies that it has been obtaining under long-term contracts. I hope that the remaining suppliers will quickly find satisfactory alternative purchasers. The remaining term supplies which the agency can trade freely are now only one tenth of the level before my statement of 13 March. The price paid by the BNOC is what the corporation can realise in the market. To that extent, BNOC has already detached itself from setting a price. That is a good base on which the agency can start.
I pay tribute to BNOC's staff. Things are now different. I wish the new agency and its staff every success.

Mr. Rowlands: I thank the Minister of State for his kind words about the way that we have conducted our affairs. He has been unfailingly courteous to the Committee and to all hon. Members who have participated in the debates. I am sorry that we were not able to persuade him that in many ways he is fundamentally wrong. It remains our charge and case that, by abolishing the British National Oil Corporation, our oil supplies will be weakened. We do not believe that the right hon. Gentleman's paper assurances from the oil companies, paper participation agreements, and the stripped-down agency which is set up under the Bill provide an adequate alternative form of security of supply. I have charged the Minister of State more than once with the utter complacency behind the way in which he has argued the case for the Bill and the way in which the Government have chosen to pursue the abolition route—abolishing a successful, vibrant and productive corporation.
I am sorry that, despite our efforts, the agency that will be born in the Bill will be a pathetic stripped-down version of what we need. The new agency will be a declining organisation from the start—trading in declining amounts of royalty oil. I do not believe that the Minister will attract people of the necessary calibre and quality to work in that agency, as opposed to those who might reluctantly be forced to go to it from BNOC.
The agency is basically self-extinguishing, as the right hon. Gentleman said. Already in oil circles the Minister's "GOPA"—Government Oil and Pipelines Agency—has been treated with contempt and derision, because everyone knows that it is not the real thing. We shall therefore vote against the Bill because we know that it is not the real thing. We look forward to the day when a Labour Government will establish a real British National Oil Corporation serving the nation's need and especially the challenge of the North sea in the 1990s.

Mr. Portillo: I have had a number of opportunities to make known my views on the Bill, and I shall not weary the House by going into them at great length again.
I am disappointed that, when the Government took the opportunity to abolish BNOC, they felt the need to set up an agency in its place. My principal worry is that the setting up of an agency means that the Government will continue to be involved in the oil market. There is still a danger that the Government will be seen as a price setter, although I understand the points made by my right hon. Friend the Minister of State. There may still be turbulent days ahead in the oil market. In the past, when conditions


on the oil market have become turbulent, someone has taken the blame for unsettling the oil price. As we enter the turbulent days ahead, some countries may again be looking for a scapegoat. I hope that my fears are groundless. Nevertheless, I harbour them.
My hon. Friend the Member for Bedfordshire, North (Mr. Skeet) and I attempted to persuade the Committee of the value of two amendments. One would have paved the way towards the privatisation of the oil pipelines and storage system, but we were unsuccessful in convincing the Committee of the merits of that scheme. I understood my right hon. Friend's argument that the time was not ripe for such a move. I was pleased——

BUSINESS OF THE HOUSE

Ordered,
That, at this day's sitting, the Oil and Pipelines Bill and the Lords Amendments to the Trustee Savings Banks Bill may be proceeded with, though opposed, until any hour.—[Mr. Michael Neubert.]

OIL AND PIPELINES BILL

Question again proposed, That the Bill be now read the Third time.

Mr. Portillo: I was pleased to have my right hon. Friend's assurance that that matter could be reviewed from time to time.
I hope that the Bill, which I support, will have a short life as an Act. My right hon. Friend has conducted the proceedings with considerable charm, and I thank him for that. However, he has not succeeded in convincing me that the agency will play a useful role, in particular in enhancing our security of supply. I look forward to the introduction in due course of an oil and gas agency abolition Bill. In November I shall listen extremely carefully to the Queen's Speech to see whether that welcome Bill will be included in next Session's business.

Mr. Bruce: Today the Government have finished a job which I and the Labour party feel they should not have started. We have reached the point where it is as well to move on to a new policy to confront the changed circumstances. My colleagues and I felt that it was right and proper for the United Kingdom to have an integrated state oil corporation, as the British National Oil Corporation originally was. Its break-up is not in the United Kingdom's interests because it reduces the Government's bargaining power with oil companies. It has not been the Government's most conspicuous performance on privatisation, as many shareholders are discovering. However, it is now as well to finish the business, and for the Government to address themselves to developing an oil and gas policy, which they have not yet done.
We are producing oil at the rate of 1 million barrels of oil a day more than our domestic requirements. There was never any agreement or debate either inside or outside the House that we should move through self-sufficiency to that level of production, but that is what we have done. In reality, the production, pricing and taxation policies of the United Kingdom North sea are determined by the Organisation of Petroleum Exporting Countries, not the United Kingdom Government, and not in accordance with the British national interest. That happens to suit the Treasury's interests.
The generation to come will wonder why we produced 1 million barrels a day above our requirements, and why we constructed a taxation system that made it attractive for multinational companies to produce British North sea oil rather than oil from other reserves in other parts of the world, especially as that tax structure did not necessarily suit our national interests.
The Labour party's attitude is often rightly suspicious, but wrongly hostile, towards the oil companies. It does riot seem to recognise that oil companies have skill and expertise which we use, and from which we have benefited. However, the Government seem not to recognise that the interests of multinational oil companies and the British national interest do not always coincide. There is a need for a much stronger recognition of that by the Government and for a much clearer debate on what our policy should be.
Now that we are to pass this Bill, the Government should consider their policy in a clear environment, because it is high time that we had a sensible policy for the future development of the North sea. The Government's present policy will come home to roost soon, when production and revenue decrease and they realise that they have not provided for that sad and rainy day.

Mr. Mike Woodcock: The present chairman of Rolls-Royce, Sir Francis Tombs, recently said that decision-making in the private sector tends to be market and profit-related whereas decision-making in the public sector tends to he highly variable, politically influenced and slow. He was speaking from vast experience of private and public sector management, and most Conservative Members would agree with his sentiments. Of course, most Labour Members would disagree with them.
That division of opinion typifies the difference between the Government and the Opposition on the Bill. Arguments have dealt with which functions are best carried out by private industry and which are best carried out in the public sector. The British oil industry is typified by fierce, free competition, and its success in exploiting our national oil resources profitably provides an excellent case history of the benefits of free competition. It is a profitable industry that contributes massively to the public purse. It enjoys no subsidy, it is largely free of oppressive trade unions, and it has learnt the lessons of economic reality—all very different from some other primary energy industries.
Those characteristics of the oil industry are clearly typical of many large commercial organisations. However, we would all agree that some functions are better carried out by state enterprise than by private enterprise.
When I examined the Bill, I could see no problem with participation agreements and with royalties in kind. However, with my hon. Friend the Member for Enfield, Southgate (Mr. Portillo) I had some reservations about pipeline operations. We have 1,000 miles of pipeline and 41 installations established for war. Some strategic use remains, but their commercial use has been overtaken by events. One could argue that private interests would have operated the system more effectively than did the public sector, but against that we must consider the fact that the


principal reason for establishing the pipeline was strategic, that the strategic element remains and that it could increase in the future.
We must come to terms with the fact that the pipeline system is little used in areas with a high defence use, but is used commercially much more in areas with a low defence use. It is difficult to establish suitable terms when defence and commercial considerations mix. However, the commercial users in my constituency at Stanlow, which is served by the pipeline, and the commercial operators in Humberside convinced me that they were happy with the present arrangements and that the management of the pipelines should remain with the state. That is why I concluded that the pipelines would be better managed by the agency.
The Bill is desirable because it renders to the private sector those functions which should be rendered to it, and leaves in the public sector those functions which are best carried out there. I welcome the Bill, which I am sure will contribute to the ever-increasing fortunes of our oil industry.

Mr. Dalyell: Like several of my colleagues from central Scotland and the senior staff of the BNOC, some of whom are my constituents, nothing will persuade me that that organisation was broken up for any other reason than political dogma. It is a crying shame, and the nation will learn to regret having given up the BNOC. I am sure that it was a mistake.
One question that arose out of the debate has not been answered. Suppose that there is an understanding between British Petroleum and the Government. Is it sensible and right that that understanding should be in the form of a letter from a head of department in BP to a Parliamentary Under-Secretary of State? If there are these understandings, without going too much into the heirarchy about it, for heaven's sake, is not the right thing to have it from the chairman of BP to the Secretary of State? If they are so important, why is it done at such a low level?

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 185, Noes 94.

Division No. 274]
[10.10 pm


AYES


Alison, Rt Hon Michael
Bruinvels, Peter


Ancram, Michael
Buchanan-Smith, Rt Hon A.


Baker, Nicholas (N Dorset)
Buck, Sir Antony


Beaumont-Dark, Anthony
Budgen, Nick


Beith, A. J.
Burt, Alistair


Bellingham, Henry
Butterfill, John


Benyon, William
Carlile, Alexander (Montg'y)


Bevan, David Gilroy
Carlisle, Rt Hon M. (W'ton S)


Biffen, Rt Hon John
Carttiss, Michael


Biggs-Davison, Sir John
Channon, Rt Hon Paul


Blackburn, John
Chapman, Sydney


Blaker, Rt Hon Sir Peter
Chope, Christopher


Boscawen, Hon Robert
Clark, Hon A. (Plym'th S'n)


Bottomley, Peter
Clarke, Rt Hon K. (Rushcliffe)


Bottomley, Mrs Virginia
Cockeram, Eric


Bowden, Gerald (Dulwich)
Colvin, Michael


Bright, Graham
Coombs, Simon


Brinton, Tim
Cope, John


Brooke, Hon Peter
Corrie, John


Brown, M. (Brigg &amp; Cl'thpes)
Couchman, James


Browne, John
Cranborne, Viscount


Bruce, Malcolm
Currie, Mrs Edwina





Dorrell, Stephen
Pollock, Alexander


Douglas-Hamilton, Lord J.
Porter, Barry


Dover, Den
Portillo, Michael


du Cann, Rt Hon Sir Edward
Powley, John


Dunn, Robert
Proctor, K. Harvey


Dykes, Hugh
Raffan, Keith


Eggar, Tim
Rhodes James, Robert


Emery, Sir Peter
Rhys Williams, Sir Brandon


Evennett, David
Ridley, Rt Hon Nicholas


Eyre, Sir Reginald
Ridsdale, Sir Julian


Fairbairn, Nicholas
Robinson, Mark (N'port W)


Fallon, Michael
Roe, Mrs Marion


Favell, Anthony
Ross, Stephen (Isle of Wight)


Fenner, Mrs Peggy
Rowe, Andrew


Fox, Marcus
Ryder, Richard


Garel-Jones, Tristan
Sackville, Hon Thomas


Gower, Sir Raymond
Sainsbury, Hon Timothy


Greenway, Harry
Sayeed, Jonathan


Gregory, Conal
Shaw, Sir Michael (Scarb')


Griffiths, Sir Eldon
Shelton, William (Streatham)


Hamilton, Hon A. (Epsom)
Shepherd, Colin (Hereford)


Hayhoe, Rt Hon Barney
Sims, Roger


Henderson, Barry
Smith, Tim (Beaconsfield)


Hind, Kenneth
Soames, Hon Nicholas


Hogg, Hon Douglas (Gr'th'm)
Speller, Tony


Holland, Sir Philip (Gedling)
Spencer, Derek


Howells, Geraint
Spicer, Jim (W Dorset)


Hunt, David (Wirral)
Stanbrook, Ivor


Jenkin, Rt Hon Patrick
Steen, Anthony


Knowles, Michael
Stern, Michael


Lang, Ian
Stevens, Lewis (Nuneaton)


Lawler, Geoffrey
Stevens, Martin (Fulham)


Lennox-Boyd, Hon Mark
Stewart, Allan (Eastwood)


Lightbown, David
Stewart, Andrew (Sherwood)


Lilley, Peter
Stewart, Ian (N Hertf'dshire)


Lloyd, Peter, (Fareham)
Stradling Thomas, J.


Lord, Michael
Sumberg, David


Macfarlane, Neil
Taylor, Teddy (S'end E)


MacKay, Andrew (Berkshire)
Tebbit, Rt Hon Norman


Maclean, David John
Temple-Morris, Peter


Maclennan, Robert
Terlezki, Stefan


Madel, David
Thompson, Patrick (N'ich N)


Major, John
Thorne, Neil (Ilford S)


Marlow, Antony
Thornton, Malcolm


Marshall, Michael (Arundel)
Thurnham, Peter


Mates, Michael
Townend, John (Bridlington)


Mather, Carol
Tracey, Richard


Maude, Hon Francis
Twinn, Dr Ian


Maxwell-Hyslop, Robin
van Straubenzee, Sir W.


Mayhew, Sir Patrick
Waddington, David


Merchant, Piers
Wainwright, R.


Mills, Iain (Meriden)
Wakeham, Rt Hon John


Mills, Sir Peter (West Devon)
Walden, George


Moate, Roger
Wall, Sir Patrick


Montgomery, Sir Fergus
Waller, Gary


Moore, John
Ward, John


Morris, M. (N'hampton, S)
Wardle, C. (Bexhill)


Morrison, Hon P. (Chester)
Warren, Kenneth


Murphy, Christopher
Wells, Sir John (Maidstone)


Neale, Gerrard
Wheeler, John


Needham, Richard
Wiggin, Jerry


Nelson, Anthony
Wilkinson, John


Neubert, Michael
Winterton, Nicholas


Newton, Tony
Wolfson, Mark


Nicholls, Patrick
Wood, Timothy


Normanton, Tom
Woodcock, Michael


Norris, Steven
Yeo, Tim


Osborn, Sir John
Younger, Rt Hon George


Ottaway, Richard



Page, Sir John (Harrow W)
Tellers for the Ayes:


Page, Richard (Herts SW)
Mr. Donald Thompson and Mr. Tony Durant.


Peacock, Mrs Elizabeth



Percival, Rt Hon Sir Ian





NOES


Archer, Rt Hon Peter
Bennett, A. (Dent'n &amp; Red'sh)


Atkinson, N. (Tottenham)
Bermingham, Gerald


Bagier, Gordon A. T.
Bidwell, Sydney


Banks, Tony (Newham NW)
Brown, Gordon (D'f'mline E)


Benn, Tony
Brown, Hugh D. (Provan)






Brown. N. (N'c'tle-u-Tyne E)
Evans, John (St. Helens N)


Buchan, Norman
Ewing, Harry


Caborn, Richard
Fatchett, Derek


Callaghan, Jim (Hey w'd &amp; M)
Fields, T. (L'pool Broad Gn)


Campbell-Savours, Dale
Fisher, Mark


Clark, Dr David (S Shields)
Flannery, Martin


Clarke, Thomas
Foster, Derek


Clay, Robert
Gilbert, Rt Hon Dr John


Cocks, Rt Hon M. (Bristol S.)
Godman, Dr Norman


Cook, Robin F. (Livingston)
Golding, John


Corbett, Robin
Gourlay, Harry


Corbyn, Jeremy
Hamilton, James (M'well N)


Cowans, Harry
Hardy, Peter


Craigen, J. M.
Hart, Rt Hon Dame Judith


Dalyell, Tam
Haynes, Frank


Davies, Ronald (Caerphilly)
Hogg, N. (C'nauld &amp; Kilsyth)


Davis, Terry (B'ham, H'ge H'l)
Home Robertson, John


Deakins, Eric
Hoyle, Douglas


Dewar, Donald
Hughes, Robert (Aberdeen N)


Dixon, Donald
Lambie, David


Dormand, Jack
Lamond, James


Duffy, A. E. P.
Leighton, Ronald


Eadie, Alex
Lewis, Terence (Worsley)


Eastham, Ken
McCartney, Hugh





McDonald, Dr Oonagh
Powell, Raymond (Ogmore)


McGuire, Michael
Prescott, John


McKay, Allen (Penistone)
Randall, Stuart


McKelvey, William
Redmond, M.


McNamara, Kevin
Robertson, George


McTaggart, Robert
Rogers, Allan


McWilliam, John
Rowlands, Ted


Madden, Max
Short, Ms Clare (Ladywood)


Mason, Rt Hon Roy
Skinner, Dennis


Maxton, John
Stewart, Rt Hon D. (W Isles)


Michie, William
Stott, Roger


Millan, Rt Hon Bruce
Thompson, J. (Wansbeck)


Miller, Dr M. S. (E Kilbride)
Tinn, James


Oakes, Rt Hon Gordon
Wardell, Gareth (Gower)


O'Neill, Martin
Wareing, Robert


Orme, Rt Hon Stanley
Wilson, Gordon


Parry, Robert



Patchett, Terry
Tellers for the Noes:


Pavitt, Laurie
Mr. Lawrence Cunliffe and Mr. Sean Hughes.


Pike, Peter

Question accordingly agreed to.

Bill accordingly read the Third time, and passed.

Orders of the Day — Trustee Savings Banks Bill

Lords amendments considered.

Mr. Speaker: Earlier, the hon. Member for Dundee, East (Mr. Wilson) asked me to consider whether the Bill might be hybrid. I have considered the matter with great care. I must point out that the business before the House is the consideration of Lords amendments. No individual bank or depositor in Scotland is singled out for adverse treatment from among the class of trustee savings banks or depostitors in Scotland by these amendments. Therefore, no question of hybridity arises.

Clause 1

PRELIMINARY

Lords amendment: No 1, in page 1, line 9, "banks" insert
other than Trustee Savings Bank Scotland Limited which is hereby excluded from this Act

Read a Second time.

Mr. Gordon Wilson: I beg to move, amendment (a) to the Lords amendment, in line 2, leave out from 'which' to end and add
'shall not be included in this Act unless a majority of depositors of Trustee Savings Bank Scotland have first given their assent in a postal ballot.'.

Mr. Speaker: With this, it will be convenient to take Government amendments (b) to (d), plus (i) and (ii).

Mr. Wilson: I thank you, Mr. Speaker, for that ruling. Although I may disagree a little, I acknowledge that your view must prevail in these matters. I am grateful for the attention that you have given to my point of order.
I only wish that it were not necessary for me to move this amendment. If the Government had been prepared to accept the Lords amendment itself, or its spirit, TSB Scotland would have been able to continue its separate existence and I would not be moving the amendment, which suggests that the matter should go to a ballot of the depositors of the company.
I make it clear to those hon. Members who have not followed the debate that has been going on for so long that we are not dealing with a small subsidiary. TSB Scotland is the 11th largest company in Scotland and the most profitable bank by a long way, with £10,500 to £11,000 worth of earnings per employee. That compares with the Royal Bank of Scotland and the Bank of Scotland, for which the relevant figure is between £6,500 and £7,500, and the Clydesdale bank at the lower figure of £3,000 per employee. The Lords amendment is right. TSB Scotland is viable in its own right and should be deleted from the Bill. I shall give the reasons in due course.
The directors of the Edinburgh chamber of commerce passed a unanimous motion asking the Government to accept the Lords decision on the grounds that it was important to retain the autonomy of financial institutions in the city of Edinburgh. On 20 April 1985 Mr. Souness, the manager of the Life Association of Scotland and the chairman of the Edinburgh chamber of commerce, referred to the cosmetic formula that had been agreed with Lord Taylor of Gryfe, who a few months ago was instrumental in and deserves credit for derailing the Bill

in the House of Lords. He said that the assurance would not count for much and that the issue was about where power lay. Criticism was made of the attitude adopted by the chairman of the Trustee Savings bank's central board. Sir John Read, when he visited Scotland. An editorial in The Scotsman described him as holding "the obdurate belief" that he and his fellow directors had got it right.
The Government's compromise in their intended replacement of the first Lords amendment is not worth a row of beads. I described it at the time as a spineless surrender and I do not retract that statement. The various assurances that are to be found in the letter addressed by Sir John Read to the Chancellor of the Exchequer on or about 16 May 1985 amount to very little. Sir John Read tossed to the Scots a string of beads to keep the natives happy.
The compromise suggests that the registered office of the group should be in Scotland. I am not sure what advantage the Government see in that proposal. The headquarters office, where the power lies, where decisions will be taken and where most of the money will be turned over, will be in London, so the conclusion must be that, like the Distillers Company or Burmah Oil, although nominally the registered office will be in Scotland, the real power and the real headquarters will be in London.
It is also suggested that there will be proposals to ensure that all banks in the TSB group remain as separate banks. This was always intended, so I do not know what advantage TSB Scotland, the banking fraternity in Scotland, the customers of TSB Scotland or the financial institutions in Scotland will derive from the proposals.
Another suggestion is that the trustees will be the directors of the new company. No more ridiculous suggestion could be made. The trustees of TSB Scotland have no credibility whatsoever. They cannot be trusted, apparently, to look after the interests of the Scottish bank. They do not intend to allow it to continue to have an independent existence. If that is so, how can they be trusted further?
I must make some comment on the strange ethics of the situation. Having willingly sacrificed themselves to the predator, the TSB Group, they appear willing to remain in the saddle to be appointed directors of the new banking subsiduary in Scotland. I am not sure what remuneration they will receive for that, whether it is 300 or 3,000 or 30,000 pieces of silver for betraying the birthright which should have been theirs after the creation of the trustee savings bank movement in Scotland two centuries ago. That pecuniary interest sits ill with the role of trustees. Even if it had been independent at the outset, the group will retain the veto, which it can exercise over the choice of new trustees. Any initiative which TSB Scotland might have been able to maintain under the new regime, will be killed off over a period if the TSB Group so wishes.
10.30 pm
There are also managerial problems associated with the changes which have been suggested. At present, these directors will not be elected by anyone: they will be appointed, if we agree with Sir John Read, the chairman of the TSB Group, as new directors of the company, without election. They will not be responsible in any way to any independent body of shareholders. Under that kind of regime, TSB Scotland will go into slack and supine


managerial hands. That is because, without responsibility to shareholders, there will be little reason for management to exert itself.
If one looks at the comparison which I gave at the beginning of my remarks between the earning capacity per employee of the Scottish banks, it is noticeable that the one with the lowest figure of £3,000 per employee, is the Clydesdale bank. It is the only Scottish bank which is a fully owned subsidiary of an external bank, the Midland. Much of the profitable work which could be undertaken by the Clydesdale bank goes to the Midland and to its specialist investment companies and merchant banks. The Clydesdale is therefore denuded of some of the more lucrative sections of the market.
Yet this seems to be the area to which we will be condemning TSB Scotland if the House succeeds in overturning the Lords amendment to cut TSB Scotland out of this bad Bill. These directors will be a self-perpetuating oligarchy. They will be appointed by no one, elected by no one and responsible to no one. That is bad in itself. As for the proposal that 75 per cent. of the directors will have to live in Scotland, that is the merest token that could ever have been devised, and in relation to the safeguarding of the net worth, it can be overtaken in the course of time.
We have a thrusting, dynamic bank at present, but the picture will change dramatically if the Lords amendment is over turned. The Government are on very uncertain ground over the Bill. The amendment I have suggested in lieu of the Lords amendment which the Government intend to demolish, is intended to ensure that, before any precipitate or final action is taken, there should be a decision by the depositors of the bank in a ballot. A majority of the depositors should agree to the changes which have been suggested by the TSB. There are specific reasons why that is desirable.
I do not feel it necessary to rehearse some of the background information I gave you, Mr. Speaker, in my point of order earlier today. If one looks at the opinion expressed by Mr. John Murray, QC, to the Trustee Savings bank central board—that is, the London body—one sees the assertion that under Scots law the trustee savings banks in Scotland are owned by the contributors. The contributors are the depositors and the depositors are the members of the bank. Therefore, the ownership of the bank rests with the depositors. If the opinion is correct, they are entitled to the produce, the reserves and assets, of the bank. I should have thought that extending wealth within the community and ensuring the widest possible ownership of the assets of this successful institution would be welcome to the Government. It is surprising that the Treasury was prepared to say in the White Paper that there was doubt about the ownership.
Some of the matters that I raised during the earlier points of order about the information given to the House require answers from the Treasury. Did the Government receive a copy of the opinion? Did they conduct their own legal inquiries into ownership? If the central board had received such an opinion, suggesting that ownership rested with depositors, would not it have been desirable for the bank to go to the Court of Session with an action of declarator asking the court to declare as to ownership, so that that was cleared out of the way at the start?
No attempt has been made by TSB Scotland or by the central board to apprise the depositors, the prima facie owners of the hank, of their rights. It was surely essential that they should have done so. The bank was established

for the customers and they have put their faith and money into TSB Scotland. Over successive generations, they have built up a very successful business which is now to be destroyed.
Given the opinion that has been received and the fact that there is to be an action in court tomorrow, it is all the more regrettable that the Government have precipitately determined to drive on regardless. Many people will regard it as legalised theft if, by an Act of Parliament, the ownership and resources of the bank are taken away from the working people for whom it was established and distributed to speculators, which is what will happen if the flotation goes ahead.
Many people in Scotland who have no objection to flotations and joint stock companies feel that this example of exploitation should not be allowed to proceed.
The Government wish to defeat the Lords amendment. My amendment suggests that before any other action takes place, the owners of the bank—the depositors—should be consulted in a postal ballot to get their views. The Government are keen on postal and other ballots in other areas. Before transferring the bank's assets to their friends in the City, they should at least test the strength of their position.
I cannot see what objection there can be to getting the agreement of the depositors. If the depositors, deemed the owners, agree to the demutualisation, if that is the correct term, of the company, at least TSB Scotland, the TSB Group and the Government will be on far stronger ground. That will be the result of a majority vote in favour. It is incumbent on the Government to tell the House whether they will accept the amendment which I have tabled. If they do not respond and if they fail to say yes, I hope that they will explain why insufficient information about this sordid affair has been placed before the House.
We are dealing with an important Scottish company. When I started my opposition to the Bill, I did so primarily on the basis that it would be a loss to the Scottish economy and the financial scene if this huge unit were to be taken out of our control. Its removal would inflict considerable damage on us.

Mr. Robert Hughes: I am following the hon. Gentleman closely. He is making a strong plea for the bank to be left in Scottish control. However, earlier in his remarks he was critical of those in control of the bank's affairs for apparently selling out. The hon. Gentleman cannot have it both ways.

Mr. Wilson: Indeed I can have it both ways. I usually do, and I am usually right. I have explained that my objection to the Bill at the outset was based on the economic and financial loss that the Scottish economy would face. However, we have run into a more fundamental issue, which is whether such a company, which has had successful mutual control in the past, should have that form of control unilaterally dismantled without the consent of the depositors, who I believe to be the true owners of the bank.
We in Scotland have had successful mutual companies in the insurance section which have done very well. I would not trust the trustees as directors in controlling the future of TSB Scotland, especially if they are answerable to no one—except ultimately, I suppose, the TSB central board. I accept that the bank has built up extremely well in recent years, has served its customers and


expanded its services. One can recognise work well done of that sort but it is still possible to criticise the trustees of TSB Scotland for their ultimate lack of vision. It appears that they have close sight but no long sight of the future.
Many Scottish companies have been taken over in the past and when that has happened the vitality has often seeped out of them and has not been replaced. Eventually these companies have either been entirely absorbed—that happened to many individual insurance companies which were based in Scotland—or closed, with job losses and a loss of leadership in the Scottish community.
If the Government insist on opposing Lords amendment No. 1, which I consider to offer the best solution, they should consider the formula which I have outlined in amendment (a) which provides that, before TSB Scotland is included in their proposals, consent should be obtained from the depositors by way of a postal ballot. In that way the Government would emerge with great credit. It is still open to them to take that course rather than to find that they have disappointed the Scottish community' in the unfortunate way in which the Bill has been prepared.
I could accept from the Minister the view that he has asserted in the past that the Bill is not one in which the Government have a pecuniary interest and that he is acting as agent for the TSB Group and, through that, TSB Scotland, but an agent is responsible to a principal. In this case, the principal is not necessarily the TSB trustees but the owners of the bank, the depositors. If that is so, the Minister would be acting in dereliction of his duty as agent if he accepted instructions from the wrong principal.
Now that he has the information and opinion that I have supplied, I hope that the Minister will acknowledge that the Government should not wish to be involved in a scandal of this sort and, even now, will accept a solution which would remove them from the hook on which they have been placed.

Mr. Donald Dewar: The new TSB's difficult birth is being attended with much doubt and uncertainty. I have no wish, in what I thought optimistically would be a short debate, to rehearse the whole history of the affair. The central issue with which we are concerned in this group of amendments is whether the exclusion of TSB Scotland from the Bill, as brought forward in another place, should survive and whether, if it does not survive, how adequate will be the Government's replacement provisions.
The debate in the other place represented an interesting episode. Lord Taylor of Gryfe apparently has an unbounded enthusiasm for devolution in the world of banking, though that enthusiasm does not have a wider application, if I remember the noble Lord's history.
I do not go all the way with the hon. Member for Dundee, East (Mr. Wilson) or with the depositors in writing off as totally worthless the concessions that have been extracted. In one of the depositors' circulars, those concessions were described as an insult to the intelligence of the Scottish electorate. While that was an overstatement, a number of questions need answering about those concessions and I hope that the Minister will provide the answers.
I am sure that I speak for many hon. Members when I say that we have no enthusiasm for the self-perpetuating board, as envisaged. The board of TSB Scotland will renew itself. It is the equivalent in the world of nature of the amoeba in the sense that it is self-generating, needing no outside help, although there is a negative check in the approval of the main board. I did not have the privilege of serving on the Standing Committee, but I expect that there was an explanation of whether they would be executive directors and whether they would be part-time or full-time. The Minister might wish to clear that up.
More helpful is the fact that the chairman and chief executive of each subsidiary bank will serve on the main board and that there will be no reduction in the worth of the bank without the consent of two thirds of that subsidiary bank's board of directors, although a cynic might ask what the worth of that is, given their silence on present events.
The real question concerns the value of the safeguards. The Minister said that there would be no vesting order until all the alternations in the articles of association had been made and the promised safeguards were in position. However, articles of association can be altered at a later date. The trouble is that the safeguards offered are immediate and there is no guarantee that they will stand the test of time. The Minister may wish to comment on that important matter, especially when we consider the adequacy or otherwise of what he proposes to put in place of the Lords amendment.
It is difficult to be objective about these issues. As we contemplate the scene, one can hear the creaks of bandwagons rumbling, and certain sections of the SNP—I am careful to say "certain sections—have been shamelessly jumping aboard. Last week it was wreaths in memory of the Labour party at the Royal High building; this week it is the Trustee Savings bank. Goodness knows what it will be next week. We must look at the arguments. There are two main areas of contention—one is the form of ownership proposed for the new organisation and the second is the loss of Scottish identity subsumed in the larger United Kingdom organisation.
I am not convinced by some of the rather romantic visions of the TSB as presently constituted, which have been used to buttress some of the debates during the course of the Bill. I do not want to go back to the philosophy of the Rev. Henry Duncan of Ruthwell and his famous strongbox with its three separate locks. However, I must tell the hon. Member for Dumfries (Sir H. Monro), whose peon of praise for the good cleric I read with interest, that he is a rather unlikely hero for a Conservative Member because his other characteristic was a decision to defy an interdict from the Court of Session during the famous legal proceedings in the Strathbogie case running up to the disruption. I would have thought that that would not have commended itself to Conservatives.
In any event whatever the Rev. Henry Duncan may or may not have done, there is a somewhat rosy coloured glow as people look at how the status of depositors has developed during the course of the TSB movement. I remember an interesting chapter in Olive Checkland's book "Philanthropy in Victorian Scotland", which deals with this at some length. I recommend it to anyone who is interested. I shall weary the House with only one sentence, which is:
The concept of trusteeship was an elitist notion: depositors had no voice in the management of the Savings Banks.


That holds true today, even as it did in the days of Victorian philanthropy that are sometimes beloved of Government Back Benchers.
I am confident that the average depositor—one of the nameless 1·25 million, of whom there are several on the Benches behind me—thinks that he has a substantial stake in the management of the TSB as presently constituted. However, it is fair to concede that there is a big difference between management and ownership. Whatever the position of the depositors in terms of management, they have a special position in the bank that is not fully recognised in the scheme embodied in this legislation.
There has been a great deal of talk about the Page committee. The findings on ownership were quoted effectively by my hon. Friend the Member for Thurrock (Dr. McDonald) on Second Reading. The House will remember that when that committee considered something very much like the solution that has now been adopted, it reached the conclusion that it was neither practical nor desirable.
There is also the open question whether the bank is or is not, in the law of Scotland, owned by its depositors. The hon. Member for Dundee, East quoted the opinion of a well-known Queen's counsel at the Scottish Bar, Mr. John Murray. We are led to understand—and I have not seen a copy of the document—that his view was that, as an unincorporated body, it was owned by the depositors. Of course, that is not the law of the land. It is an educated guess about what the courts might find if they were invited to consider that question. But it underlines that we are in a peculiar position tonight because we are all aware that there is an action pending in the courts—an application for interdict—that is likely to be heard tomorrow. None of us know the outcome of that. It will be strange if the Court of Session says tomorrow that ownership is with the depositors and grant an interdict on that basis.
Perhaps the Minister can tell us the Government's view of the effect of such an interdict. If he has doubts, he can obtain an instant opinion from another QC sitting on his left—the Solicitor-General for Scotland.
Will Parliament override the court and make the interdict useless? What will be the effect of that interdict? What will happen to depositors who have been established in ownership and have a tangible right, which we are alienating, who will have no rights in the courts because Parliament is legislating to destroy their right to pursue their claim? That raises interesting questions which are not academic and which might become horribly relevant tomorrow.
I hope that the Minister will give us the benefit of his thoughts on the matter. If he cannot do that, I hope that we shall hear from the Solicitor-General for Scotland.
The Page committee, the opinion of counsel and the atmosphere of the trustee savings bank movement has been referred to. I believe that a substantial shift is envisaged in the Bill. It is not a matter that involves only a technical reconstruction of company status.
Leaving aside the question whether the bank is thrusting and dynamic, the TSB has served its depositors and its existence is based upon offering certain services. No one apart from salaried professionals, makes a profit or obtains a fee.
Under the new arrangement trustees will have a different remit. They will be bound by the Companies Act. Their job will be to maximise profits for the benefit of a

different body of people—the shareholders. There might be an overlap. They will do that by extracting profit from the depositors. That will create a different atmosphere.
The important position now held by depositors was recognised by the Minister in his recent letter to Mr. R. A. G. Bennett of the depositors' association when he said that the preferential share option scheme was a recognition of the special place of the depositors in the TSB set-up.
Depositors are in a special position. The evidence for that is contained not only in the Page report, but in the way that the bank has been operating. To that we want to add the Scottish dimension. Scotland has a long and distinguished involvement and a well-developed network. Central funds have been gathered there. We have come a long way since the Rev. Henry Duncan's banks were established to
ameliorate the conditions of the lower orders
in Scotland.
I am told that 3,000 employees are involved, that the operating profit is £32 million, that there are 2 million accounts and 1·5 million depositors. There is no doubt that the Scottish bank would be a substantial entity if it existed in its own right. That was tacitly admitted by an authority that might appeal at least to Conservative Members—Lord Bruce-Gardyne—who said on 16 April 1985 that TBS Scotland would be well able to stand on its own two feet. I do not think that there would be any argument about that.
I do not want to argue that case at this stage at any length, but there is an understandable anxiety. It was referred to by my hon. Friend the Member for Thurrock on Second Reading, when she pointed out that there was a danger of the bank, weak in the south, using the vast majority of its resources over the opening years to try to cover the areas where it had not a long and well-established tradition. She rightly said that that should not be at the expense of Scotland and the north.
11 pm
We have here a fair amendment that calls for consultation. There is clearly a case for that consultation, based on the Scottish experience. There may be an argument about whether it is right to go ahead on the present arrangements, but that should be tested. I hope that I have established that the depositors are people who have a particular interest and should be consulted.
I have no doubt that substantial arguments can be put forward by the promoters of the scheme. They can argue that the employees are, as I understand, largely in favour of the reorganisation going ahead. They can talk about a better service for the customer from a commercial bank with a more competitive system. They can argue that the depositors' association is unrepresentative. It has not hidden the fact that it came late in the field and has only about 200 members out of the 1,250,000 depositors. The promoters can argue that an independent bank would be open to a substantial possibility of takeovers and would be in a weak position. There are all sorts of arguments, and it is not for us tonight to come to a conclusion on them.
I have tried to put some arguments and the hon. Member for Dundee, East has done the same. On both sides there are arguments that should be decided by the depositors, and they should be consulted before we come to a final conclusion on the matter. The very fact that they are entitled to preferential treatment perhaps underlines the case for consultation of the kind that I have mentioned.
I am a member of a building society. I was surprised to discover that I am a member because I have only a few pounds in an ordinary share account. A couple of days ago I received a voting slip, because the building society is about to amalgamate. It is asking me to vote on whether I want that amalgamation to go ahead. I accept that a building society has a very different structure from that of a trustee savings bank, but it is thought not inappropriate that everyone who has a deposit in the building society should be allowed to vote on whether the Alliance should join with the Leicester. All we are asking is for the same sort of basic right for the depositors in the TSB.
I hope that the Government will look sympathetically at the amendments. I hope that they will accept that there is a case for consultation, given the Scottish dimension that we have been talking about and given the undoubted change in the status of depositors that would result from the Bill. If the Minister will accept the amendment, or one of them, we can proceed with harmony and consent and there need be no further delay. If he cannot, I believe that we should divide the House upon it and, if we are unsuccessful, mark our disapproval by dividing also on the main Question.

Mr. George Robertson: On a point of order, Mr. Deputy Speaker. May I ask your advice on the important issue that we are considering? Various privileges are to be conferred by the Bill on depositors with the Trustee Savings Bank. There will be hon. Members in the House this evening who may be intending to vote and who may have accounts and be depositors with the Trustee Savings Bank.
I have an account with the Trustee Savings Bank which contains 81p, but the principle goes beyond that. In view of the lucrative offers that are being patronisingly placed before depositors, Mr. Deputy Speaker, can you advise me—and perhaps the House as well—as to the position of hon. Members if as depositors they were to find themselves in the Division Lobbies this evening?

Mr. Deputy Speaker (Mr. Harold Walker): The practice of the House is clear. Any hon. Member who has a pecuniary interest in the matter being debated and who is participating in the debate should declare that pecuniary interest. All hon. Members may vote on a matter of public interest. I hope that that is clear.

Sir Hector Monro: I am sure that Dr. Henry Duncan would be surprised that, 175 years after founding the savings bank movement, his name has been trotted about the Floor of the House at 11 pm. The hon. Member for Glasgow, Garscadden (Mr. Dewar) thought that it was unlikely that I would support Dr. Duncan, but I do. He set a fine example of sticking by one's principles over the disruption. At least a fine monument was erected in memory of his good work. This is unlikely to be reciprocated in the streets of Garscadden.
I think that Dr. Duncan would want the House to bear in mind that he spent much of his time promoting the savings bank movement in England and Wales. He was internationally minded and outward looking—very far removed from the narrow internal views of the hon. Member for Dundee, East (Mr. Wilson).
It is important to delve into the history not of the distant past but of the past two or three months. I should like my

hon. Friend the Economic Secretary to marry Government amendment (d) with the important letter from Sir John Read, the TSB chairman, which was printed in detail in the other place on 4 July in reply to a written question by Lord Taylor of Gryfe to the Chancellor of the Duchy of Lancaster. How binding is the letter? How tied into the legislation is the assurance that in Scotland we will have the many factors set out in the letter, especially in relation to
an independently managed Scottish bank"—[Official Report. House of Lords,4 July 1985; Vol. 465, c. 1394.]
which is registered in Scotland—I think that this is covered by deed—the issues relative to the charitable foundations under paragraph 4 (iii) and the membership of the Scottish board under paragraph 4(v)?
If my hon. Friend the Economic Secretary spells out in detail how he sees the arrangements for conducting the business of the Trustee Savings bank—both the United Kingdom and the Scottish groups—and how they tie together, that may well go a long way towards alleviating the concern in some parts of Scotland. This concern has not been reciprocated by the staff of the TSB nor originally by the trustees when the Bill came before us on Second Reading.
All of us who live in Scotland, who are interested in the bank's success and who realise that a large part of the bank's success in Scotland will go towards making it a great successor in the United Kingdom—[Interruption.]Why does the right hon. Member for Western Isles (Mr. Stewart) laugh at that? Is he not proud that the Scottish bank can take the lead in the United Kingdom? Should he not be pleased, rather than sit there girning away?

Mr. Donald Stewart: Surely the hon. Gentleman is aware from his experience that that is not the way the scenario will operate. The bank will simply become a branch office without any power.

Sir Hector Monro: Despite all the years that the right hon. Gentleman has served in the House his mind never broadens or becomes more up to date. In some years' time he will realise that tonight he witnessed the passage of legislation that greatly enhanced the prestige of the TSB in Scotland.
I hope that when my hon. Friend replies to the debate, which is broadly similar to the Second Reading debate in the other place, he will spell out how the letter from Sir John Read is tied into legislation. We want an assurance that what Sir John Read said will take place, and is bound as far as possible by legislation.

Mr. Jim Craigen: My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said that we were in a peculiar position. Indeed, we are, because we are dealing with a peculiar Bill. On Second Reading I declared an interest as a depositor in the Trustee Savings bank, and, as hon. Members know, I opposed Second Reading.
In the other place Lord Gowrie said that the Government could not allow the Bill to proceed to Royal Assent with clause 3. The Bill should not be enacted. Therefore, I would not be unhappy if the Government's motion, that we disagree with the Lords, were refused. It is becoming increasingly evident that serious questions about the ownership of the bank, if not in England and Wales, certainly in Scotland, have not been adequately resolved.
The group of amendments arises from an amendment of Lord Taylor of Gryfe, which succeeded on Report in another place. That amendment, which aroused a great deal of interest in Scotland, revealed the extent to which Edinburgh's financial establishment had been sleeping because it came some time after this House had given the Bill a Second Reading. It does not instil me with much confidence in Edinburgh as the second financial centre in the United Kingdom that Edinburgh took so long to wake up to what was going on.
It is more than anecdotal——

Mr. Deputy Speaker: Order. I am sorry to interrupt the hon. Gentleman, but an unreasonable volume of noise is coming from the vicinity of the Bar of the House. I hope that the hon. Gentleman will be given the opportunity to deliver his speech without too much background noise.

Mr. Craigen: It has been suggested to me that Lord Taylor's amendment might not have been passed in the other place if the President of Malawi had not been visiting the United Kingdom. There was a big dinner in his honour at Windsor Castle and, therefore, many on the Government side in the other place were absent. I am sure that Dr. Banda, who resided in and was educated in Scotland, would have a good old chuckle at that.
The more serious aspect was the flaw in Lord Taylor's amendment. Reference was made to the letter from the chairman of the central board. All hon. Members may not share the simplistic confidence exuded by the hon. Member for Dumfries (Sir H. Monro), but it seems an eggshell of a scheme. The first tap of a wooden spoon would give us a smack of what the scheme amounts to.
We have been told that the head office of TSB Scotland will be in Scotland, and that the TSB Group's registered office will be in Edinburgh. I understand that the Scottish Council (Development and Industry) has already said that it wants the entire operation to be located in Edinburgh. The shareholders' annual general meeting will be in Edinburgh, no doubt at the time of the Edinburgh festival.
11.15 pm
Those assurances, and the supposed safeguards about residential qualification for the directors of the new TSB in Scotland, do not amount to much. They certainly do not overcome the basic problem of ownership, which the Government have not fully resolved, and the question whether it is right for the Government to consent to the flotation of TSB on the stock market.
Lord Taylor in another place said that the concessions that had been agreed with the chairman of the central board of the TSB were more than half a loaf. However, having examined the concessions closely, it seems to me that they are little more than a handful of grain. They provide some managerial assurances, not proprietorial safeguards, because they do not alter the effect of the change in control.
This might be a convenient moment to say why I tabled amendment (ii), which calls for consultative arrangements with depositors. Although the Government are likely to have their way this evening, I believe that there should be adequate arrangements to ensure that the depositors with the TSB have a voice in the new set-up. It is clear from Sir John Read's letter that he envisages that no more than about one tenth of the depositors will become shareholders of the new TSB. We have been told all along that it is desirable to have shareholders because we wish to involve

many more people in the running of the bank. yet it is explicitly acknowledged in the letter that not many more than one tenth of the depositors are likely to become shareholders.
Therefore, it is all the more important that some mechanism is written into the Bill so that the other nine tenths of depositors can have some machinery by which their views and complaints can be made known to the board. That should not be left to the whim of the chairman or the board. Since the TSB wished to be different and to involve more people than do the clearing banks, I should have thought that it would have wanted to have some customer representation within the established arrangements. That is why it was important to table the amendment.
Some reference has been made to mutuality. A depositors' association has been set up. Irrespective of whether it has 230 or 250 members so far, the fact is that there must be some recognition of depositors' rights in this exercise.
I noticed with interest that, in the letter which the Treasury Minister sent to the chairman of the Scottish TSB Depositors' Association on 4 July 1985, the Government made their position quite clear on the matter of mutuality. Copies of the letter were issued as a parliamentary answer. The Minister said:
I agree of course that there are successful mutual financial institutions. But it is one thing to allow long-established mutuals to continue in business in their traditional fields of activity and quite another to set up brand-new mutual arrangements in modern circumstances.
The Government effectively appear to be trumpeting a new arrangement that organisations will be either private or public. In the Government's scheme of fiscal and economic affairs, it seems that there will be no encouragement and precious little assistance to mutuality as a concept. I wonder whether that is entirely desirable.
Many hon. Members have experience of mutuality in other areas. The TSB is not strictly a mutual, but I see no reason why it could not have moved towards the concept of mutuality. I think that the TSB could raise the capital for which it is looking, had it had shares which could be indexed and interest paid. I do not think that it needs to float an unknown business on the stock exchange to raise the capital which it says is necessary for many of these developments.
When the Minister tells the House why we should accept the Government proposal and disagree with the Lords amendment, I should like him to say whether the Government, had they known counsel's opinion, which was apparently given to the TSB in April 1979, would have come forward with a Bill, or would have left it entirely to the Trustee Savings bank to introduce a private Bill.
On Second Reading, I described the measure as closet privatisation. I want to know where the Treasury stands in all this. Many questions have been unanswered in the conduct of this highly undesirable plan to sell off the TSB.
As I said before, it will be a highly lucrative exercise. Those who buy will not be risking anything in the way that they would be in buying equities in a business. The reserves of the TSB are such that it will be an Aladdin's cave. I am not sure whether the Minister is Ali Baba or one of the 40 thieves, but I think it is important that the Treasury should spell out precisely where it stands, given the knowledge that the House now has.

Mr. Nicholas Fairbairn: I declare an interest. I am, or was, a depositor in the Edinburgh savings bank, and discovered, following the publication of the Bill, that my account, which stood at £1 10s 6d, is now worth £2.68 28 years later. I do not know whether that is in favour of or against the present structure of the bank, but that is the extent of my interest. No doubt I will be one of the thieves of whom the hon. Member for Glasgow, Maryhill (Mr. Craigen) has just spoken, because I would be entitled to shares if the matter goes forward to flotation.
Several matters of important principle are raised. It is obvious that no hon. Member—and it is not yet settled in the courts—is certain about the legal constitution of the organisation of the Trustee Savings bank. Without wishing to give a firm opinion, I would say that the Bill would turn a non-profit-making association into a profit-making company. If I am right, the distinction is that the original association had, under the trusts legislation—that is why it is called a trustee savings bank—a duty to maximise the benefits of the depositors. That is why the name was changed from the Edinburgh savings bank or any other bank to the Trustee Savings bank. Those who were in charge of it therefore had a duty to maximise the benefits of the beneficiaries—the depositors.
The new company has a completely different duty. It is exempted from, even if it is not precisely under, the requirements of trusts legislation, to maximise profits as a commercial organisation. Such a company has an utterly different structure in law in Scotland and in understanding as an organisation. The Government are merely the agent, runner or duty doer for the board of the TSB in putting forward the Bill. I do not believe that the Government would ever have done that if they had conceived of the legal structure of the bank.
We do not know what the legal structure of the bank is. The Court of Session will begin to decide that tomorrow. We know however, that it was called the Trustee Savings bank because it was believed to be such an organisation. It would have been a contravention of the Trade Descriptions Act 1968 if anybody had called it that and it had not been a trustee savings bank.
I do not wish to judge something which, if it is not sub judice, is very nearly sub judice. Let us assume that, as I have proposed, the court decides that the organisation comes under the umbrella of trusts legislation and has a duty to provide for the maximisation of the benefit of the beneficiaries—the depositors. Then the Bill will supravene abante the rights of the beneficiaries. It will be taking a trust and making it into a commercial enterprise without the consent of the beneficiaries, contrary to the duties of the trustees.
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We can take it the other way. The case may go to the first division and then to the other place, so it may be a long process. I am not looking into the motivation of those who raised the action but into the rights and wrongs of the matter. Supposing that the courts decide the other way. Then, have not the depositors, all these years, been misled as to their rights, and the duties of the directors?
I know that there are political motives. I know that there are those who say that anything that is Scottish must remain Scottish, and those who want to know whether the ban will be more Scottish if Sir John Read's letter is implemented than ever it was before. I am unimpressed by either the one side or the other. I am impressed by the fact

that the defensive letter of Sir John Read has no force in statute and that any allegation that it is an earnest of eternal will has no force.
I am certain of various matters that concern me. The directors sought the opinion of counsel, which they were always entitled to reject, and which has regrettably—because it is a confidential matter—been revealed. It has been revealed, and we understand that they were informed and did not challenge that information, that the bank belonged to the depositors and that they were trustees for the beneficiaries. The directors then came to the Government to ask them to derogate their duty and later the function of that charity—trusts are charities. That raises serious poblems. If we are then told that the same adviser is advising them on the matters in which they are trying to reverse his opinion, that also raises serious matters.
We are told that Lord Taylor of Gryfe in the other place acts for Morgan Grenfell, which is, after all, acting with Noble Grossart in the Bell's whisky deal. The day after Lord Taylor accepted the advice, who was it that Sir John Read said would be a satisfactory director? It was Angus Grossart, of Noble Grossart. That raises other matters.
I am not, and hope will never be, able to understand anything about finance. I hate alligators, and I hate predators, and I hate everything about finance. However, if the financial institutions of Scotland are to be run on the basis that the TSB gets the advice of top counsel, hides that advice from the Government and asks the Government to bring in a Bill that contradicts it, then asks the same counsel to advise it in the opposite direction, and then in the other place the Government accept a compromise from a noble Lord who is in the financial institution of Morgan Grenfell, and the bank of Morgan Grenfell, in league with Noble Grossart says that the safeguard is to appoint one of their directors, all I can say is that the scepticism of a natural Jacobite Episcopalian is confirmed.
I am not a little Scotlander, but I am a little depositor in Trustee Savings Bank Scotland. I am very sceptical about constitutional arrangements whereby a trust becomes a public company when the question whether or not it is a trust has yet to be decided by the courts. The principles I have raised tonight ought to give a great deal of thought to a great number of people.

Mr. Barry Porter: On a point of order, Mr. Deputy Speaker. Although I am not an accountant, a Scot or even a Pict, I have listened with great interest to this debate and have become increasingly disturbed by the points about interest that have been raised. I am a partner in a firm that is a substantial customer of the Trustee Savings bank. Originally, Mr. Deputy Speaker, you made a distinction between declaring an interest and speaking and then voting on a matter of public interest. I am not entirely certain about the distinction between the public interests and the private interests of a firm like mine. If this flotation takes place, my firm and I, as a partner in that firm, will have a substantial interest in it. I should welcome a ruling about how you make a distinction between public and private interests in a matter of this nature. At the moment I am reluctant either to speak or eventually to vote upon it.

Mr. Deputy Speaker: Order. I am surprised that the hon. Gentleman has taken such a close interest in this matter, since I have been disturbed by the unreasonable


noises that have been disrupting the debate from below the Gangway. I doubt whether I can usefully add to my earlier ruling that all hon. Members have a right and a responsibility, in accordance with the practice of the House, to declare any pecuniary interests that they may have in the subject under debate.

Mr. Porter: Further to that point of order, Mr. Deputy Speaker. On behalf of my hon. Friends the Members for Macclesfield (Mr. Winterton) and for Birmingham, Selly Oak (Mr. Beaumont-Dark) I apologise for the noise that they have been creating, but I have been seeking their advice. I am no wiser, nor am I much better informed about the distinction between public and private interests. Therefore in accordance with my conscience I declare an interest. It would be quite wrong of me to vote on this matter.

Mr. Robert Maclennan: This has been a strange debate. The Bill has followed a very unexpected course. When the Government first introduced it, the matters that have become so controversial tonight, at a late stage in the proceedings on the Bill, appear not to have ruffled the feathers of those who are alleged to be most at risk from the proposals of the trustees of the Trustee Savings bank Scotland.
There has been a penumbra of criticism throughout the debate of the motivation of the trustees in suggesting this flotation and of the Bill that the Government have adopted—a penumbra that became rather more solid when the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) spoke. He implied a somewhat sleazy motivation. It is going slightly beyond what is strictly necessary to impute improper motives to those who have been putting forward these proposals since August 1982. There has been singularly little criticism of these proposals, either from the depositors or from the commercial rivals of the Trustee Savings bank Scotland, or from anyone who might have been thought to be adversely affected by the proposals.

Mr. Fairbairn: I did not say that the motivation of those who proposed this matter was in any way sleazy. I said that once the matter had been proposed and difficulties arose, what happened thereafter might be subject to close scrutiny.

Mr. Maclennan: The House has been subjecting this Bill to ever closer scrutiny, and no doubt will properly continue to do so for a little time yet. What has come out at this late stage in the Bill is that the proposed shape of the new bank is thought in some way to provide less protection for depositors than previously existed.
The hon. Member for Glasgow, Maryhill (Mr. Craigen) has taken a close interest on the Opposition side of the House in this matter for a long time. He complained that there might be under-representation in the new structure because only 10 per cent. of the depositors will be in the shareholding body. But that will be 10 per cent. more than has been represented in management decisions or in the decision-making process of the bank at any stage in its history. It is at least plausible to argue that the principal concern of the trustees in moving towards this new shape for the bank is the interests of the depositors. One must assume from their silence that the depositors have consented to what has been done. Over a period of three years, they have had plenty of opportunity to raise this matter.
For the bank to be organised as a public limited company would be in the interests of depositors. The bank has increasingly become comparable to a clearing bank and has ceased to be primarily a savings institution. It operates in the hight street like other banks and operates accounts that can be drawn upon. I doubt whether depositors really view it as being, in important respects, very different from, shall we say, the Royal bank or the Bank of Scotland. The operations have become very difficult to distinguish for the ordinary depositor who uses the services of the bank.
These facts have been somewhat lost sight of in the understandable and wholly legitimate controversy that has arisen about whether the Trustee Savings bank Scotland should be operated as a Scottish bank in Scotland with all the benefits that might bring to a strenghtened Scottish financial sector. There was a singular lack of criticism from those who have been concerned to see some strengthening of the Scottish financial sector. I suppose that the hon. and learned Member for Perth and Kinross believes that that is because they were in some way competitors and might not be interested in making that case. There were certainly others who, for political or other motives, might have thought it appropriate to boost the case for the independence of the Trustee Savings bank.
I need not go over the facts about the strength of the Trustee Savings bank Scotland. The statistics were cited by the hon. Members for Dundee, East (Mr. Wilson) and for Glasgow, Garscadden (Mr. Dewar) earlier in the debate. It is perfectly clear that the Trustee Savings bank Scotland is by far the strongest part of the whole trustee savings bank coterie. It could have stood on its own feet and I regret that is not what was proposed, because it would have been extremely sensible and we would have given it our support. They said to the Government, "Let us join this new United Kingdom organisation and let us do so without any protection of the separate Scottish interest." That was the point that the Bill had reached when the hon. Member for Dundee, East moved his famous amendment. There are many more hon. Members in the Chamber tonight than there were on that occasion. To give the hon. Gentleman credit, it must be said that he has taken a consistent line on the matter and has pushed the issue further.
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The hon. Member for Dundee, East had only 29 votes for his amendment and the matter appeared to have been lost. It was revived only when my noble Friend Lord Taylor of Gryfe moved an amendment in another place that was given all-party backing, including support from the Labour party in the unexpected person of Lord Stoddart of Swindon and reluctant support from Lord Ross of Marnock. Even at that late stage, they sought to extract a new structure for the Scottish side of the TSB.
It was too late to rewrite the Bill. It would have been desirable for TSB Scotland to be established separately, and that could have been done, but it was not open to another place to unravel the Bill. The political reality was that the Government, with their substantial majority in this House, could have overridden any amendment and left the Bill in its original form. It would have had the wholehearted support of the hon. Member for Dumfries (Sir H. Monro) in that. He was utterly contemptuous of the amendment of the hon. Member for Dundee, East and he


suggested that the hon. Gentleman knew nothing about Scottish banking. Events have proved the hon. Member for Dumfries wrong.
The agreement that followed consideration of the Bill in another place has resulted in some important changes. I hope that the Minister will say something about the extent to which those changes can be made to stick. They are consensual and are not written into the Bill. They appear to rest on the somewhat shaky foundations of the articles of association of the new company.
However, the changes that were agreed and are set out in Sir John Read's letter are not insubstantial. They show that it is at least the present intention of the TSB to establish a separate Scottish management, located in Scotland and with its registered headquarters in Scotland. The board will appoint its own members and they will not be appointed by the central board in London, although the members will be subject to the board's approval. There will also be a right of representation on the main board.
The provision that 75 per cent. of the Scottish board should be resident in Scotland is not a nugatory provision. It is a practical way of ensuring that the management of the board remains in Scotland.
Like the hon. and learned Member for Perth and Kinross, I am interested in the matters that are to be considered in the court in Scotland. However, whatever the findings, proceedings have begun too late. There can be no question of the legislative process being held up by that late decision to raise these issues in the court. The very tardiness with which that matter has been pursued raises the question whether the issues are so pressing and whether there is the threat to depositors' interests that is suggested may be implicit in what is being done, or in the action that is being recommended by the trustees.
I do not feel that Sir John Read has proposed an ideal compromise and I do not regard the guarantees as copper-bottomed. However, at this late stage I do not think that there is an alternative to accepting them. They go a great deal further than the Scottish Members were prepared to go prior to the vote in another place. which was an extremely valuable step in stopping the Bill reaching the statute book without effective consideration of what might be done to safeguard the Scottish dimension of the bank.
The Bill will be seen to have justified the scrutiny role of another place. Those who would wish to see that role eliminated might think fit to read the reports of its debates and consider how effective it has been.
The Government have, for the most part, tried to play the part of an honest broker. When it came to the crunch, I am glad that they were prepared to put some pressure upon Sir John and his colleagues to produce an end result which, though far short of what we would have wished originally, is a great deal better than the Bill as it first appeared before us. I regret very much that TSB Scotland will not, in its new life, be continuing entirely on its Scottish feet.

Mr. Archie Kirkwood: I am pleased to be able to take up the remarks of my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan). I accept entirely the analysis that he has deployed, but I shall take the issue to a slightly more fundamental level.
It is true that the management of the TSB, in its own terms and within its own lights, has acted perfectly properly. It has acted efficiently and prospered in the best interests of the business as it sees them. The Government have probably acted according to their best lights as an honest broker in a difficult situation in their promotion of the Bill. The scrutiny that was given to the Bill in this place and in another place has revealed some difficulties which some of us—I include myself in the number—did not anticipate would emerge. From an operational. pragmatic and commercial point of view, everything that was said by my hon. Friend the Member for Caithness and Sutherland was right, but I am deeply uneasy about the fundamental principles of Scotts law that are at stake.
I followed carefully the interesting speech of the hon. and learned Member for Perth and Kinross (Mr. Fairbairn). First, a trustee savings bank is an unusual institution, and that presents us with a difficulty. If the Government had thought more carefully about that, they may have prevented us from having to face the problem before us.
The duty placed on the trustees of the original TSB institutions was totally different from that described by the hon. and learned Member for Perth and Kinross. My interpretation of their duty is that it was to promote savings, no more and no less. In other words, in small rural areas and in the high streets of small Scottish towns they tried to engender the ethic of thrift. If that was their function, and if they had no similiarity to a company limited by shares under the Companies Act, they were—and, therefore, still are—in a unique position. They do not have a joint stock bank structure, which is what the Bill sets out to achieve. The difference is that the trustees had the duty to promote savings, whereas a joint stock bank is established to make profit for the benefit of the shareholders. The two are totally different and no amount of legislative magic can translate the TSB into a joint stock banking company without considering who owns the assets of between £600 million and £700 million.
The bank has plans to continue, and I have no doubt that the TSB would prosper, if it were permitted to continue as it is. The depositors would benefit from that. While I would not go all the way with the hon. Member for Dundee, East (Mr. Wilson), especially in some of the language that he used, there is a danger that the House may be asked to put constitutional clothing on what is, in effect, an act of appropriation of the worst sort. That makes me uneasy about the whole process.
A small number of depositors have argued for a greater say, but I should have been happier if more of them had backed up the lead that was given by some of their number. While, therefore, the issue can be considered on a commercial or organisation level, on the one hand, it can be considered on a political level, on the other. It can be considered on the level of decentralisation and devolution to Scotland in terms of the amendment, and I join those who say that there is a cogent argument to be made for decentralising the bank and making it an exclusively Scottish institution—a point that I made on Report.
Now that the Government have had time to look at all the ramifications, and now that the Minister has heard the legal opinion, I should be interested to know the Government's attitude, although I have been a solicitor for long enough to know that one should not believe everything in an opinion. What is the Government's


solution to how to bridge the gap between the present association and the joint stock bank being created by the Bill?
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My only suggestion—and I realise that it is fraught with practical difficulties—is that some way, somehow, the depositors' opinion must be tested. They must be brought into the process. I would feel deeply restive and uneasy going through the Lobbies to support a measure with which in all other respects I agree, but where the legal questions are of fundamental importance to me as a Scots lawyer.

Mr. Craigen: Does that mean that the hon. Gentleman will support the amendment tabled by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) and my amendment which deals specifically with consultation with the depositors?

Mr. Kirkwood: I listened carefully to the hon. Gentleman's speech, and he has made one or two perceptive speeches on this matter. I want to hear the Minister before I decide how to vote. I support the hon. Gentleman's case, but I want the Government to address themselves to the fundamental legal question about the ownership of the assets of the bank.

Mr. Peter Pike: I have spoken during every stage of the Bill. Unlike the hon. Member for Caithness and Sutherland (Mr. Maclennan), who asked what could be done at this late stage, I believe that the Government could withdraw the Bill. Quite simply, irrespective of whether the Government accept the Lords amendment or whether any of the amendments being debated are carried. I believe that we will still be left with a bad Bill. It would be best if the Government withdrew the Bill.
The advertisements of the TSB on television show what it has achieved, so it is hard to believe that it desperately needs the Bill to be passed now. We should allow more time for more thought and come back with a better Bill next year. We should not speed through the Bill when the TSB advertisements show its success over recent years. Rapid progress is not essential. Unlike other privatisations, the Government have no financial gain from this Bill. Any money resulting from the sale of shares will remain with the TSB.
We do not have to accept the proposals for Scotland. We should wait to see what is determined in the court. The amendments on consultation are exceptionally important. Unless the TSB Scotland is very different from the English regional banks, there has not been any consultation with its customers. The hon. Member for Caithness and Sutherland mentioned that the Bill has been under discussion for three years. Therefore, when they have been sending statements to customers, I cannot understand why the TSB in Scotland or any of the regions has not carried out a consultation exercise and informed its customers of its proposals and why it wants to carry them out, and sought their views.
Customers and depositors should be able to express their view. Tomorrow the court will decide whom the trustees represent. If the trustees are acting in the best interests of depositors, they should have the confidence to consult them and see what they want to do.
I support the amendment to the Lords amendment. If it is not accepted I shall support several other amendments,

but the best solution is for the Government to withdraw the Bill to allow proper consultation. The Government are acting as agent, so the legislation is not essential to them. Let the Government withdraw the legislation. Let us give the matter a year's thought and introduce a better Bill in the next Session.

The Economic Secretary to the Treasury (Mr. Ian Stewart): Any Minister called upon to take through the House a Bill relating to a body with no owners of its assets has a formidable task. I am convinced that the Government were right to think most carefully about the basis on which they should legislate. Throughout proceedings I have tried to keep in mind the origins of my family in the manse and to have a generous, liberal-minded approach, particularly to the Scottish question.
The Scottish question has two parts. The first is the question of independence and the operation of TSB Scotland as a bank with a Scottish identity managed and run in Scotland. The second question is about the constitution, the way in which that bank should be accountable and whether depositors should have a different constitutional position. The Lords amendments are also relevant.
Before embarking upon the legislation, the Government considered the legal position carefully. We were satisfied that there was no element of expropriation in the Bill. The contents of Mr. Murray's opinion were known to us at all material times. I am advised that Mr. Murray's opinion was not the only opinion obtained by the trustees of the Scottish trustee savings banks. Before proposals were discussed with the Government, they had considered advice. It would be wrong for us to advise the House to delay consideration of the measure pending the outcome of an action which is taking place at a late stage in the Bill's progress.

Mr. Dewar: There was an intervention from the Government Benches below the Gangway from a certain solicitor. Perhaps I should have said—although I do not think it amounts to an interest—that I am a partner in a law firm which no doubt on occasion has contact with the Trustee Savings bank.
Will the Minister say a word or two about the effect of an interdict, if there were to be such a happening in the courts, based upon a finding that ownership rested with the depositors? What would be the impact of that and what would be the effect on the Government's plans?

Mr. Stewart: If the pursuer—I understand that is the correct term for an appellant in a Scottish court—in this case, contrary to the advice that the Government have received, were to succeed in obtaining a judgment against the trustees of TSB Scotland, we would, of course, consider our subsequent action in the light of that judgment. [Interruption.] As I have already said, it would be wrong for us to defer consideration of the Bill at this stage.

Mr. Eric Cockeram: May I help my hon. Friend and other colleagues in the House? A similar occurrence took place about there years ago during the passage of a Bill of considerably greater constitutional significance than this one—the Canada Bill. An action was started very late in the courts in an attempt to delay the Bill. The Lord Chancellor in another place ruled that Parliament should not—indeed, could not—have its


business put aside because a citizen or a group of citizens had started an action in the courts, and that Parliament must proceed with its business. Furthermore, he ruled that it would be wrong for Parliament to bow to such actions. Otherwise, any citizen or group of citizens could delay Parliament's business on any Bill passing through the House.

Mr. Stewart: That is a helpful contribution. [Interruption.] I am surprised that Opposition Members should find amusement in such sensible comments as I have made. I suppose they would wish me to say that the Government would not consider their subsequent action in the light of such a judgment.

Mr. Craigen: Returning to the assurance that the Minister gave earlier as to what would happen if the declarator were to fall the other way and not the way that the Government expect, will he give an assurance that the Bill will not be sent for Royal Assent until the matter of the court judgment is resolved?

Mr. Stewart: I do not propose to give any specific assurances about the outcome of any action which has not yet been heard. It would be irresponsible of me to do so. I have given the House a reasonable assurance on the point raised with me by the hon. Gentleman. I gave way to him because of the long and close interest that he has had in the Bill. I compliment him on the consistency with which he has put his case. But I think that he and all hon. Members should recognise that there has been a very long period during which it has been open to any depositor to challenge the TSBs on the point of ownership.
The present legal framework of the TSBs goes back to the Labour Government's Trustee Savings Bank Act 1976. The current proposals which are now contained in the Bill were first put forward three years ago in a statement by the TSBs which received extensive press coverage and which was reflected in the annual report of each TSB at that time and subsequently. Details were then spelt out in the Government's own White Paper last December, and the Bill has proceeded through its various stages in the Commons and in another place during the past six months. At no point during that time did any depositor see fit to challenge the legal basis on which the proposals were made, and we consider the present action to be misconceived.

Mr. Wilson: Does the hon. Gentleman accept that the TSB movement made no attempt to contact its depositors to tell them what was happening, let alone to find out whether they would approve such changes?

Mr. Stewart: I am coming to the matter of consultation with the TSB depositors, and I shall take account of the hon. Gentleman's point.
The difficulty with the TSB's constitutional position is that, contrary to what the hon. Member for Dundee, East (Mr. Wilson) said, the depositors are not the owners. The hon. Member for Glasgow, Maryhill (Mr. Craigen) said that the TSB is not strictly mutual. In fact, it is not mutual at all. Had it been mutual, the task of producing a Bill for the future of the TSBs would have been a great deal easier. No legal ownership makes it extremely complicated.
The question of depositors being consulted lies at the heart of the amendments proposed by the hon. Member for

Dundee, East and by the hon. Member for Glasgow, Garscadden (Mr. Dewar). In 1976, the Government introduced a provision that 25 per cent. of the trustees of each TSB should be elected by the depositors. Those elections took place, but in almost every case they were not contested. Between 1976 and last year, only two elections were contested. In both cases, the same person contested the elections, and was heavily defeated. That does not seem to demonstrate a great fever of depositor interest in the conduct of the TSBs. In many ways, it would have been healthier if more depositors had taken the opportunity of putting forward and supporting candidates, but in 1976 it was felt that this was a means of allowing some form of participation by the depositors. In practice, the depositors have greeted that provision with comprehensive apathy. That is not a basis on which we could say that the constitutional arrangements for the TSBs should be overturned or qualified in a way that would suddenly give the depositors a decisive part to play by a ballot, as the hon. Member for Dundee, East proposed, or by some other means of consultation.

Mr. Fairbairn: Under the provisions of the 1976 Act no one has ever invited me as a depositor to vote for a person who wished to be a trustee. Surely I am not expected to put forward my own candidates and propose my own ballot. As a depositor, I should have been asked. I assure my hon. Friend the Economic Secretary that I have not been asked, and I do not know of any other depositor who ever has been.

Mr. Stewart: I do not know whether all the depositors in TSBs in Scotland are as active and enthusiastic as my hon. and learned Friend the Member for Perth and Kinross (Mr. Fairbairn). I understood that he had a deposit of £2·68, which he had allowed to sit in the TSB without paying much attention to it. Had he gone to the TSB, he would have seen that notices are put up in the branches about elections. Had he been a keen depositor, he would have asked for a copy of the TSB's annual report and accounts and would have found full details of all these proposals. I do not want to point the finger only at my hon. and learned Friend, because that would be unfair. I was about to say that there are a million or more people like my hon. and learned Friend, but perhaps that would not be credible, and I should say that there are a million or more depositors with TSB Scotland, who are like my hon. and learned Friend in that they have taken no part in the operation and activities of the TSB with which they deposit their money. Faced with such a lack of enthusiasm from depositors, it would not be right at this late stage to introduce half-baked procedures for consultation with depositors who have not taken advantage of the statutory provisions, which were specifically inserted into the 1976 legislation to give them an opportunity to express their opinions.

Mr. Tom Clarke: In view of the somewhat nonchalant way in which the Minister dismissed his hon. and learned Friend the Member for Perth and Kinross (Mr. Fairbairn), will he explain where in his argument there is anything consistent with the Government's recent attitude to trade union ballots?

Mr. Stewart: There is a slight difference between trade unions and TSBs, which resides in the fact that trade unions have members and TSBs do not. Earlier I explained


how difficult it was to deal with a body which had no ownership or members, because it was not a mutual organisation. TSBs are certainly not constitutionally like trade unions.
I said that the question related to two aspects. The second is that, of the Scottish identity of TSB Scotland. The hon. Member for Dundee, East said that if we did not reject the Lords amendment, we would allow TSB Scotland to continue a separate existence, but that is exactly the opposite of the case. The Bill would then repeal the existing legislation under which TSB Scotland is constituted, and would not provide for it under the new legislation. TSB Scotland would, therefore, have no position in law, be unable to gain recognition as a bank, and presumably, therefore, have to cease business.
The Government have followed a much more constructive approach. Following the proceedings in another place we have endeavoured to ensure that in its final form the Bill will reflect the interests of the TSBs—the management and depositors—be soundly based in law, and reasonably take account of the anxieties expressed in Parliament during the Bill's passage. That is why amendments (b), (c) and (d) seek to introduce a specific provision—the concept of eligibility to succeed—whereby a separate new banking company will be registered in each territory and will take over the assets and business of the previous TSB in that country or territory.
The fact that we must move to disagree with the Lords amendment, and that I must suggest that these amendments should replace it, is purely because of the procedure in another place which meant that these amendments could not technically be tabled there on Third Reading. Therefore, they must be considered by this House.
In addition to the amendment that makes it plain that successor banks will have a separate identity closely related to their country, many hon. Members have drawn attention to the contents of Sir John Read's letter to my right hon. Friend the Chancellor of the Exchequer, which is printed in the Official Report of 4 July. We should recall the undertakings given in that letter: first, that the head office and registered office of each bank should be in its country; secondly, that each bank's board should appoint its members and that they should not be London nominees; thirdly, that 75 per cent. of the directors should be normally resident in that country; fourthly, that the chairman and chief executive of the banks in England and Scotland should be appointed to the group board; and, finally, and importantly, that the holding company should not be able to reduce the net worth or set the dividend policy of the subsidiary banks without the agreement of two thirds of their directors.
As the hon. Member for Caithness and Sutherland (Mr. Maclennan) said, they are important changes. He said that they were not all he wanted, but he fairly recognised that they constituted an important safeguard for the Scottish identity of TSB Scotland in the future. My hon. Friend the Member for Dumfries (Sir H. Monro) asked how independent the bank would be. All that I can say is that, whereas at present the trustees of any bank can merge it with another without an Act of Parliament, after the Bill is passed they could not do so without returning to the House with a private Bill. If this evening's proceedings are anything to go by, they might have great difficulty in gaining the approval of the House.

Mr. Craigen: The Minister mentioned depositor apathy in elections. Will he spell out what accountability there will be in the elections by new shareholders of the directors of banks?

Mr. Stewart: The new shareholders will have a direct say in the nomination and re-election of directors in the group parent bank. They will have no such say in relation to the subsidiaries. It is correct to say that the boards of the subsidiaries will appoint further directors in due course, but that is the normal pattern with subsidiary companies in groups. In this case, there will be greater assurance of the independence of those boards because of the provisions that I have just mentioned. It will be impossible for the parent company to nominate directors to the subsidiary boards of TSB Scotland or any other TSB. Those are important changes.
I accept fully that, although the amendments passed in the other place caused extensive reconsideration, they have resulted in important improvements in the basis on which the Bill will proceed. I willingly acknowledge that all those who have put forward ideas on Scottish independence have played their part in bringing that about. I hope that most hon. Members will accept that, having reached this stage, the Bill reflects most of the concerns that were expressed during its passage. Therefore, I hope that they will support the Government's amendments.

Dr. Oonagh McDonald: I have felt like an intruder during much of the debate, because despite the way in which some people interpret my surname, I have no connection with Scotland—[HoN. MEMBERS: "Shame."] I have connections with a better place.
The Minister referred to the legal position, and insisted that there was no need to delay the Bill pending the legal action. One can understand his point. However, it was entirely unsatisfactory to say that, if the judgment went against the Government, he would merely consider subsequent amendment. He did not consider the possibility that if the judgment went against the Government, it would mean that the depositors' accounts had been expropriated. Therefore, the Government would have to consider the matter seriously and the Bill would not receive its Royal Assent.
12.30 am
Secondly, the Minister referred to the letter from the chairman, which was published in the Official Report of 4 July. Once again, we find that some of the main commitments are in the articles of association. We had to make the point frequently in discussion of the Bill on Second Reading, in Committee and on Report that those articles of association could be changed, provided that 51 per cent. of the shareholders agreed. As my hon. Friend the Member for St. Helens, South (Mr. Bermingham) pointed out at one stage, given that shareholders are to be limited by the articles of association to 50 per cent., one need only envisage 11 institutions which hold 5 per cent. of the shares getting together to be able to change the articles of association.
Thirdly, the Minister said that the depositors were not owners and therefore should not be consulted. Even so, that does not give a strong enough reason for refusing consultation because the depositors, after all, occupy rather a special position as regards the TSB Scotland. If one in four in Scotland are depositors with the TSB Scotland, this should be an important consideration.
In all the debates, we have emphasised very much the special character of the TSB in Scotland. While one might say that the depositors are not owners and therefore have no right to be consulted, if we accepted the Minister's argument, we could still go on to say that, although they may have no legal right to be consulted, it would be quite in keeping with the whole tradition of the TSB Scotland to consult them.
Finally, the Minister accused the depositors of comprehensive apathy, and gave that as a reason for not allowing them to be consulted at this important stage of the change in status, however ill-defined, of the TSB, and particularly of the TSB Scotland. Like Viscount Whitelaw, the Minister seems to believe that one should not go round the country stirring up what he is pleased to call apathy. The Opposition believe that it would be quite proper to stir up the depositors' apathy on this occasion, and to allow them to be consulted before this important change takes place.
The Minister's replies have been very weak, and he has not given us any of the guarantees which my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) requested. We shall vote accordingly.

Mr. Wilson: With regard to the legal side, as the Minister put it, I have rarely come across such a brazen attitude as that adopted by the Minister. He discards an opinion which states that the ownership of the bank lies with the depositors. He says that the Government took other legal advice, and has given no indication of what that might be. I find that remarkable.
In relation to the amendment, he has not convinced me that the provisions are other than minimal, and they will do very little to safeguard the independence of the Trustee Savings bank.
In summary, there has been breach of trust, in my opinion. There has also been breach of ownership, in my opinion. Having heard the Minister, I think that there has been a breach of the Government's credibility.

Question put, That the amendment to the Lords amendment be made:—

The House divided: Ayes 69, Noes 139.

Division No. 275]
 [12.34 am


AYES


Ashdown, Paddy
Ewing, Harry


Beith, A. J.
Fatchett, Derek


Bermingham, Gerald
Fields, T. (L'pool Broad Gn)


Brown, Gordon (D'f'mline E)
Fisher, Mark


Brown, Hugh D. (Provan)
Foster, Derek


Brown, N. (N'c'tle-u-Tyne E)
Godman, Dr Norman


Bruce, Malcolm
Hamilton, James (M'well N)


Buchan, Norman
Hardy, Peter


Caborn, Richard
Hart, Rt Hon Dame Judith


Campbell-Savours, Dale
Haynes, Frank


Carlile, Alexander (Montg'y)
Hogg, N. (C'nauld &amp; Kilsyth)


Clarke, Thomas
Home Robertson, John


Clay, Robert
Hughes, Sean (Knowsley S)


Cocks, Rt Hon M. (Bristol S.)
Hughes, Simon (Southwark)


Corbyn, Jeremy
Kennedy, Charles


Craigen, J. M.
Lewis, Terence (Worsley)


Cunliffe, Lawrence
McCartney, Hugh


Dalyell, Tam
McDonald, Dr Oonagh


Davies, Ronald (Caerphilly)
McKay, Allen (Penistone)


Dewar, Donald
McKelvey, William


Dixon, Donald
Maclennan, Robert


Dormand, Jack
McTaggart, Robert


Eadie, Alex
McWilliam, John


Evans, John (St. Helens N)
Marshall, David (Shettleston)





Maxton, John
Short, Ms Clare (Ladywood)


Meadowcroft, Michael
Skinner, Dennis


Michie, William
Snape, Peter


Millan, Rt Hon Bruce
Steel, Rt Hon David


Miller, Dr M. S. (E Kilbride)
Stewart, Rt Hon D. (W Isles)


O'Neill, Martin
Strang, Gavin


Parry, Robert
Thompson, J. (Wansbeck)


Patchett, Terry
Wainwright, R.


Pike, Peter



Powell, Raymond (Ogmore)
Tellers for the Ayes:


Prescott, John
Mr. Gordon Wilson and Mr. Archy Kirkwood.


Robertson, George



Rowlands, Ted





NOES


Amess, David
Maude, Hon Francis


Ancram, Michael
Maxwell-Hyslop, Robin


Baker, Nicholas (N Dorset)
Mayhew, Sir Patrick


Beaumont-Dark, Anthony
Merchant, Piers


Bellingham, Henry
Mills, Iain (Meriden)


Benyon, William
Moate, Roger


Biffen, Rt Hon John
Montgomery, Sir Fergus


Biggs-Davison, Sir John
Morris, M. (N'hampton, S)


Blackburn, John
Morrison, Hon P. (Chester)


Blaker, Rt Hon Sir Peter
Moynihan, Hon C.


Boscawen, Hon Robert
Murphy, Christopher


Bottomley, Peter
Neale, Gerrard


Bottomley, Mrs Virginia
Neubert, Michael


Bowden, Gerald (Dulwich)
Nicholls, Patrick


Bright, Graham
Normanton, Tom


Brinton, Tim
Norris, Steven


Brooke, Hon Peter
Osborn, Sir John


Brown, M. (Brigg &amp; Cl'thpes)
Ottaway, Richard


Browne, John
Page, Sir John (Harrow W)


Bruinvels, Peter
Page, Richard (Herts SW)


Buck, Sir Antony
Peacock, Mrs Elizabeth


Budgen, Nick
Percival, Rt Hon Sir Ian


Burt, Alistair
Pollock, Alexander


Butterfill, John
Portillo, Michael


Carlisle, Rt Hon M. (W'ton S)
Powley, John


Cash, William
Proctor, K. Harvey


Channon, Rt Hon Paul
Raffan, Keith


Chope, Christopher
Rhodes James, Robert


Clark, Hon A. (Plym'th S'n)
Rhys Williams, Sir Brandon


Clarke, Rt Hon K. (Rushcliffe)
Ridsdale, Sir Julian


Cockeram, Eric
Robinson, Mark (N'port W)


Coombs, Simon
Roe, Mrs Marion


Cope, John
Rowe, Andrew


Couchman, James
Ryder, Richard


Currie, Mrs Edwina
Sackville, Hon Thomas


Dorrell, Stephen
Sainsbury, Hon Timothy


Douglas-Hamilton, Lord J.
Shaw, Sir Michael (Scarb')


Dover, Den
Shelton, William (Streatham)


du Cann, Rt Hon Sir Edward
Shepherd, Colin (Hereford)


Dunn, Robert
Sims, Roger


Dykes, Hugh
Smith, Tim (Beaconsfield)


Eggar, Tim
Spencer, Derek


Evennett, David
Spicer, Jim (W Dorset)


Fallon, Michael
Stanbrook, Ivor


Favell, Anthony
Stern, Michael


Fraser, Peter (Angus East)
Stevens, Lewis (Nuneaton)


Garel-Jones, Tristan
Stevens, Martin (Fulham)


Gregory, Conal
Stewart, Allan (Eastwood)


Hamilton, Hon A. (Epsom)
Stewart, Andrew (Sherwood)


Henderson, Barry
Stewart, Ian (N Hertf'dshire)


Hind, Kenneth
Stradling Thomas, J.


Holland, Sir Philip (Gedling)
Sumberg, David


Hunt, David (Wirral)
Terlezki, Stefan


Knowles, Michael
Thompson, Donald (Calder V)


Lawler, Geoffrey
Thompson, Patrick (N'ich N)


Lennox-Boyd, Hon Mark
Thorne, Neil (Ilford S)


Lightbown, David
Thornton, Malcolm


Lilley, Peter
Thurnham, Peter


Lloyd, Peter, (Fareham)
Tracey, Richard


Lord, Michael
Twinn, Dr Ian


Maclean, David John
Waddington, David


Madel, David
Walden, George


Major, John
Wall, Sir Patrick


Marlow, Antony
Waller, Gary


Mather, Carol
Wardle, C. (Bexhill)






Warren, Kenneth
Yeo, Tim


Wheeler, John
Younger, Rt Hon George


Wilkinson, John



Winterton, Mrs Ann
Tellers for the Noes:


Winterton, Nicholas
Mr. Ian Lang and Mr. Tony Durant.


Wolfson, Mark



Wood, Timothy

Question accordingly negatived.

Motion made, and Question put, That this House doth disagree with the Lords in the said amendment:—

The House divided: Ayes 138, Noes 57.

Division No. 276]
[12.45 am


AYES


Amess, David
Major, John


Ancram, Michael
Marlow, Antony


Baker, Nicholas (N Dorset)
Mather, Carol


Beaumont-Dark, Anthony
Maude, Hon Francis


Bellingham, Henry
Maxwell-Hyslop, Robin


Benyon, William
Mayhew, Sir Patrick


Biffen, Rt Hon John
Merchant, Piers


Biggs-Davison, Sir John
Mills, Iain (Meriden)


Blackburn, John
Moate, Roger


Blaker, Rt Hon Sir Peter
Montgomery, Sir Fergus


Boscawen, Hon Robert
Morris, M. (N'hampton, S)


Bottomley, Peter
Morrison, Hon P. (Chester)


Bottomley, Mrs Virginia
Moynihan, Hon C.


Bowden, Gerald (Dulwich)
Murphy, Christopher


Bright, Graham
Neale, Gerrard


Brinton, Tim
Nicholls, Patrick


Brooke, Hon Peter
Normanton, Tom


Brown, M. (Brigg &amp; Cl'thpes)
Norris, Steven


Browne, John
Osborn, Sir John


Bruinvels, Peter
Ottaway, Richard


Buck, Sir Antony
Page, Sir John (Harrow W)


Budgen, Nick
Page, Richard (Herts SW)


Burt, Alistair
Peacock, Mrs Elizabeth


Butterfill, John
Percival, Rt Hon Sir Ian


Carlisle, Rt Hon M. (W'ton S)
Pollock, Alexander


Cash, William
Portillo, Michael


Channon, Rt Hon Paul
Powley, John


Chope, Christopher
Proctor, K. Harvey


Clark, Hon A. (Plym'th S'n)
Raffan, Keith


Clarke, Rt Hon K. (Rushcliffe)
Rhodes James, Robert


Cockeram, Eric
Rhys Williams, Sir Brandon


Coombs, Simon
Ridsdale, Sir Julian


Cope, John
Robinson, Mark (N'port W)


Couchman, James
Roe, Mrs Marion


Currie, Mrs Edwina
Rowe, Andrew


Dorrell, Stephen
Sackville, Hon Thomas


Douglas-Hamilton, Lord J.
Shaw, Sir Michael (Scarb')


Dover, Den
Shelton, William (Streatham)


du Cann, Rt Hon Sir Edward
Shepherd, Colin (Hereford)


Dunn, Robert
Sims, Roger


Durant, Tony
Smith, Tim (Beaconsfield)


Dykes, Hugh
Spencer, Derek


Eggar, Tim
Spicer, Jim (W Dorset)


Evennett, David
Stanbrook, Ivor


Fallon, Michael
Stern, Michael


Favell, Anthony
Stevens, Lewis (Nuneaton)


Fraser, Peter (Angus East)
Stevens, Martin (Fulham)


Garel-Jones, Tristan
Stewart, Allan (Eastwood)


Gregory. Conal
Stewart, Andrew (Sherwood)


Hamilton, Hon A. (Epsom)
Stewart, Ian (N Hertf'dshire)


Henderson, Barry
Stradling Thomas, J.


Hind, Kenneth
Sumberg, David


Holland, Sir Philip (Gedling)
Terlezki, Stefan


Hunt, David (Wirral)
Thompson, Donald (Calder V)


Knowles, Michael
Thompson, Patrick (N'ich N)


Lang, Ian
Thorne, Neil (Ilford S)


Lawler, Geoffrey
Thornton, Malcolm


Lennox-Boyd, Hon Mark
Thurnham, Peter


Lightbown, David
Tracey, Richard


Lilley, Peter
Twinn, Dr Ian


Lloyd, Peter, (Fareham)
Waddington, David


Lord, Michael
Walden, George


Maclean, David John
Wall, Sir Patrick


Madel, David
Waller, Gary





Wardle, C. (Bexhill)
Wood, Timothy


Warren, Kenneth
Yeo, Tim


Wheeler, John
Younger, Rt Hon George


Wilkinson, John



Winterton, Mrs Ann
Tellers for the Ayes:


Winterton, Nicholas
Mr. Tim Sainsbury and Mr. Michael Neubert.


Wolfson, Mark





NOES


Bermingham, Gerald
Home Robertson, John


Brown, Gordon (D'f'mline E)
Hughes, Sean (Knowsley S)


Brown, Hugh D. (Provan)
Lewis, Terence (Worsley)


Brown, N. (N'c'tle-u-Tyne E)
McCartney, Hugh


Buchan, Norman
McDonald, Dr Oonagh


Caborn, Richard
McKay, Allen (Penistone)


Campbell-Savours, Dale
McKelvey, William


Clarke, Thomas
McTaggart, Robert


Clay, Robert
Marshall, David (Shettleston)


Cocks, Rt Hon M. (Bristol S.)
Michie, William


Corbyn, Jeremy
Millan, Rt Hon Bruce


Craigen, J. M.
Miller, Dr M. S. (E Kilbride)


Cunliffe, Lawrence
O'Neill, Martin


Dalyell, Tam
Parry, Robert


Davies, Ronald (Caerphilly)
Patchett, Terry


Dewar, Donald
Pike, Peter


Dixon, Donald
Powell, Raymond (Ogmore)


Dormand, Jack
Prescott, John


Eadie, Alex
Robertson, George


Evans, John (St. Helens N)
Short, Ms Clare (Ladywood)


Ewing, Harry
Skinner, Dennis


Fatchett, Derek
Snape, Peter


Fields, T. (L'pool Broad Gn)
Stewart, Rt Hon D. (W Isles)


Fisher, Mark
Strang, Gavin


Foster, Derek
Thompson, J. (Wansbeck)


Godman, Dr Norman
Wilson, Gordon


Hamilton, James (M'well N)



Hardy, Peter
Tellers for the Noes:


Hart, Rt Hon Dame Judith
Mr. John McWilliam and Mr. John Maxton.


Haynes, Frank



Hogg, N. (C'nauld &amp; Kilsyth)

Question accordingly agreed to.

Amendments made to the Bill in lieu of Lords amendment No. 1 disagreed to: (b), in page 2, line 11, leave out from 'and' to end of line 13 and insert 'eligible to succeed them'.

(c), in page 2, line 30, after 'business', insert
'and eligible to succeed it'.

(d), in page 2, line 35, at end insert—
'() For a company to be "eligible to succeed" an existing bank it must have been, immediately before the vesting day, a subsidiary of the Central Board or the existing holding company and it must—

(a) in the case of the company which is to succeed the existing bank for England and Wales, be registered (and accordingly have its registered office) in England and Wales;
(b) in the case of the company which is to succeed the existing bank for Scotland, be registered (and accordingly have its registered office) in Scotland;
(c) in the case of the company which is to succeed the existing bank for Northern Ireland, be registered (and accordingly have its registered office) in Northern Ireland; and
(d) in the case of the company which is to succeed the existing bank for the Channel Islands, be incorporated (and accordingly have its registered office) in any of the Channel Islands.'.—[Mr. Ian Stewart.]

Lords amendment No. 2: after clause 1, insert the following new clause—Share holdings for deposit holders and employees—

". From the vesting day 25 per cent, of the shares in the TSB Group shall be held in trust for holders of deposits in the TSB Group and employees of the TSB Group, the trustees being elected annually in equal numbers by appropriate Associations of both groups."

Motion made, and Question proposed, That this House doth disagree with the Lords in the said amendment.—[Mr. Ian Stewart.]

Dr. McDonald: The point of principle involved in the amendment was debated on Second Reading, in Committee and on Report. We support the Lords amendment which proposes that, in order to preserve the traditional character of the TSB, 25 per cent. of shares should be assigned to depositors and employees.
The employees are particularly keen that the amendment should be accepted, because it would give them more weight in their negotiations with the employers. Throughout the discussions about the future of the TSB, the Banking, Insurance and Finance Union has pressed for the flotation of shares to resemble the British Telecom flotation in which a proportion of shares were set aside for employees.
The objection from the TSB and the Government is that the bank hopes to get more than 1 million shareholders, but that seems to be an arbitrarily selected figure and a piece of window-dressing by the TSB management to make its flotation and plans for the future of the bank look more attractive to the Government. We need not take that figure seriously.
On Report we debated an amendment proposing that 50 per cent. of shares should be set aside for staff and depositors. The Economic Secretary to the Treasury said that he would
like to see a substantial proportion of the shares of the issue being so allocated".—[Official Report, 20 February 1985; Vol. 73, c. 1129.]
It seems to us that 25 per cent. is a substantial proportion and, in view of the Economic Secretary's comment, the Lords amendment should be accepted.

Mr. Kirkwood: Having lost the earlier argument on the ownership of the TSB, we should note that an amendment calling for 49 per cent. of shares to be assigned in the manner proposed by Lords amendment No. 2 was moved by my noble Friend Lord Taylor of Gryfe. That proposed proportion of ownership having been lost, my noble Friend Lord Banks moved an amendment that proposed 25 per cent. ownership which was tested and fell, but it is wrong for the Government to overturn the amendment which was successfully moved by Lord Banks.
1 am
The Government are pressing for wider participation and there is a case for a much broader basis of ownership than the Bill would provide without the amendment. All that it is offering is priority for depositors and staff in the purchase of shares. The amendment would leave 25 per cent. in trust for depositors and employees, with 12·5 per cent. each.
The Minister, Lord Gowrie, considered some objections against the amendment and raised them, but they were all dealt with effectively by Lord Banks when he spoke of the difficulties that were perceived by the Government in having a structure that provided for 25 per cent. to be in trust for depositors and staff. It was made clear in another place that it is possible for commercial operations to survive and prosper with a proportion of a company's shares held in such a way. The John Lewis partnership was cited as an example, where 100 per cent. of the shares are held by employees. That is a very

successful commercial operation and there is no reason why a similar procedure should not operate for depositors, especially in an organisation with the tradition of the TSB.
A series of further questions were put to Lord Banks in another place and they were all dealt with effectively and I do not believe that the Government have a case. It is wrong for them to deny the staff and depositors an element of future interest in the TSB as a whole. It is wrong also for the Government to seek to overturn the amendment that was made in another place.

Mr. Ian Stewart: The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) has referred to the debates that took place in another place. I do not think that we need to rehearse all the arguments again. He referred to the John Lewis partnership, which has a trust for 30,000 staff. There is a difference here, because we are talking about many millions of depositors.
The central question is whether the TSBs should be mutuals or in Companies Act form. I do not believe that there should be a half-way house, a sort of pseudo mutuality, for part of the capital of the TSBs. If 25 per cent. of the capital were put in trust in the way that is proposed, in addition to the 5 per cent. for charities, that would create a block of 30 per cent. of the share capital, which would dominate the direct shareholding of depositors and other small shareholders. It would cut across the intention of the TSBs to obtain a large number of depositors and other small shareholders. The hon. Member for Thurrock (Dr. McDonald) poured scorn on the figure of 1 million, but that is the TSB's objective. If we were to accept the Lords amendment, we would make it much more difficult for the TSBs to achieve their goal.
There are great difficulties in practical terms. The two reasons most strongly in favour of a Companies Act constitution are, first, the need for accountability to shareholders, which would be overborne by the combination of the charity holding and the 25 per cent. depositor trust, and secondly, and more importantly perhaps, access to capital. If 30 per cent. of the capital were held in a restricted way, it would be impossible to raise capital from the other shareholders without giving the same increase in capital to the trust, and the trust would not have sufficient resources to respond. It would seriously hamper the activities of the TSBs without giving them the other compensating advantages of a different structure.

Question put, That this House doth disagree with the Lords in the said amendment:—

The House divided: Ayes 132, Noes 62.

Division No. 277]
[1.05 am


AYES


Amess, David
Browne, John


Ancram, Michael
Bruinvels, Peter


Baker, Nicholas (N Dorset)
Buck, Sir Antony


Beaumont-Dark, Anthony
Budgen, Nick


Bellingham, Henry
Burt, Alistair


Benyon, William
Butterfill, John


Biffen, Rt Hon John
Carlisle, John (N Luton)


Biggs-Davison, Sir John
Carlisle, Rt Hon M. (W'ton S)


Blackburn, John
Cash, William


Blaker, Rt Hon Sir Peter
Channon, Rt Hon Paul


Boscawen, Hon Robert
Chope, Christopher


Bottomley, Peter
Clark, Hon A. (Plym'th S'n)


Bottomley, Mrs Virginia
Clarke, Rt Hon K. (Rushcliffe)


Bowden, Gerald (Dulwich)
Cockeram, Eric


Bright, Graham
Coombs, Simon


Brinton, Tim
Cope, John


Brooke, Hon Peter
Couchman, James


Brown, M. (Brigg &amp; Cl'thpes)
Currie, Mrs Edwina






Dorrell, Stephen
Powley, John


Douglas-Hamilton, Lord J.
Proctor, K. Harvey


Dover, Den
Raffan, Keith


Dunn, Robert
Rhodes James, Robert


Durant, Tony
Rhys Williams, Sir Brandon


Eggar, Tim
Robinson, Mark (N'port W)


Evennett, David
Roe, Mrs Marion


Fallon, Michael
Rowe, Andrew


Favell, Anthony
Sackville, Hon Thomas


Fraser, Peter (Angus East)
Sainsbury, Hon Timothy


Garel-Jones, Tristan
Shaw, Sir Michael (Scarb')


Gregory, Conal
Shelton, William (Streatham)


Henderson, Barry
Shepherd, Colin (Hereford)


Hind, Kenneth
Sims, Roger


Holland, Sir Philip (Gedling)
Smith, Tim (Beaconsfield)


Hunt, David (Wirral)
Spencer, Derek


Lang, Ian
Spicer, Jim (W Dorset)


Lawler, Geoffrey
Stanbrook, Ivor


Lennox-Boyd, Hon Mark
Stern, Michael


Lightbown, David
Stevens, Lewis (Nuneaton)


Lilley, Peter
Stevens, Martin (Fulham)


Lloyd, Peter, (Fareham)
Stewart, Allan (Eastwood)


Lord, Michael
Stewart, Andrew (Sherwood)


Maclean, David John
Stewart, Ian (N Hertf'dshire)


Marlow, Antony
Stradling Thomas, J.


Mather, Carol
Sumberg, David


Maude, Hon Francis
Terlezki, Stefan


Maxwell-Hyslop, Robin
Thompson, Donald (Calder V)


Mayhew, Sir Patrick
Thompson, Patrick (N'ich N)


Merchant, Piers
Thorne, Neil (Ilford S)


Mills, Iain (Meriden)
Thurnham, Peter


Moate, Roger
Tracey, Richard


Montgomery, Sir Fergus
Twinn, Dr Ian


Morris, M. (N'hampton, S)
Waddington, David


Morrison, Hon P. (Chester)
Walden, George


Moynihan, Hon C.
Waller, Gary


Murphy, Christopher
Wardle, C. (Bexhill)


Neale, Gerrard
Warren, Kenneth


Neubert, Michael
Wheeler, John


Nicholls, Patrick
Wilkinson, John


Normanton, Tom
Winterton, Mrs Ann


Norris, Steven
Winterton, Nicholas


Osborn, Sir John
Wolfson, Mark


Ottaway, Richard
Wood, Timothy


Page, Sir John (Harrow W)
Yeo, Tim


Page, Richard (Herts SW)
Younger, Rt Hon George


Peacock, Mrs Elizabeth



Percival, Rt Hon Sir Ian
Tellers for the Ayes:


Pollock, Alexander
Mr. John Major and Mr. Archie Hamilton.


Portillo, Michael





NOES


Ashdown, Paddy
Brown, Gordon (D'f'mline E)


Bermingham, Gerald
Brown, Hugh D. (Provan)





Brown, N. (N'c'tle-u-Tyne E)
Kennedy, Charles


Bruce, Malcolm
Kirkwood, Archy


Buchan, Norman
Lewis, Terence (Worsley)


Caborn, Richard
McCartney, Hugh


Campbell-Savours, Dale
McDonald, Dr Oonagh


Carlile, Alexander (Montg'y)
McKay, Allen (Penistone)


Clarke, Thomas
McKelvey, William


Clay, Robert
Maclennan, Robert


Cocks, Rt Hon M. (Bristol S.)
McTaggart, Robert


Craigen, J. M.
McWilliam, John


Cunliffe, Lawrence
Marshall, David (Shettleston)


Dalyell, Tam
Maxton, John


Davies, Ronald (Caerphilly)
Meadowcroft, Michael


Dewar, Donald
Michie, William


Dixon, Donald
Millan, Rt Hon Bruce


Dormand, Jack
Miller, Dr M. S. (E Kilbride)


Eadie, Alex
O'Neill, Martin


Evans, John (St. Helens N)
Parry, Robert


Ewing, Harry
Patchett, Terry


Fatchett, Derek
Pike, Peter


Fields, T. (L'pool Broad Gn)
Powell, Raymond (Ogmore)


Fisher, Mark
Robertson, George


Foster, Derek
Rowlands, Ted


Godman, Dr Norman
Skinner, Dennis


Hamilton, James (M'well N)
Steel, Rt Hon David


Hardy, Peter
Strang, Gavin


Haynes, Frank
Thompson, J, (Wansbeck)


Hogg, N. (C'nauld &amp; Kilsyth)



Home Robertson, John
Tellers for the Noes:


Hughes, Sean (Knowsley S)
Mr. A. J. Beith and


Hughes, Simon (Southwark)
Mr. Gordon Wilson.

Question accordingly agreed to.

Lords amendment No. 2 disagreed to.

Lords amendments Nos 3 to 8 agreed to.

Committee appointed to draw up a Reason to be assigned to the Lords for disagreeing to one of their amendments to the Bill: Mr. Barry Henderson, Mr. John Major, Dr. Oonagh McDonald, Mr. John Maxton, Mr. Ian Stewart; Three be the quorum.—[Mr. Ian Stewart.]

To withdraw immediately.

Reason for disagreeing to one of the Lords amendments reported, and agreed to; to be communicated to the Lords.

EUROPEAN LEGISLATION

Ordered,
That Mr. Nicholas Soames be discharged from the Select Committee on European Legislation and Mr. William Cash be added to the Committee.—[Mr. Durant.]

Orders of the Day — Teachers (Pay)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Durant.]

Mr. Kenneth Hind: I am glad to have the opportunity to discuss the current teachers' pay dispute. I am a former polytechnic lecturer, married to a college lecturer who comes from a family of teachers, so the continuation of the pay dispute causes me concern. It must be in our interests to create the best education system possible. One of the ways to do that is to attract to the teaching profession the best qualified and most able teachers to teach our children.
The profession must be presented as an attractive vocation. Little can be more important if we are to nurture and develop the seed corn of tomorrow's Britain. The future is in our hands. We must have the best teachers available at our disposal.
We must consider the problem in the light of the society that we want for the future. As information technology and technology generally advances we shall need to provide people with higher qualifications who can cope with the jobs created by that technology.
We shall see a society in which there will be fewer hours of work, in which people will retire earlier, and in which they will stay at school longer. They will have to learn at school how to cope with the increased leisure that such a society will provide.
The second function of the future education system will be to provide the necessary training for the skills that will be required for the jobs of the future. We are effectively facing a social revolution, and the main function of the education system will be to enable people to adjust to it. It is for that reason that many of us in this House are very concerned to get the best teachers that we possibly can.
The main reason for the present teaching dispute is the reduction since 1979 by about 1 million of the number of children in our schools. It has had a number of important effects on the teaching profession. The number of posts available for promotion is becoming much more limited. A considerable number of teachers are now stuck on scales 1 and 2. There is no movement and very few senior teacher posts are being created.
Would-be teachers are being required to stay at school for an extra two years to do A-levels, to take degree courses and B.Ed. courses. Many of the honours graduates go on to obtain teaching certificates. They do not go into a job until they are 21 or 22. Those extra years at school or university have to be rewarded by proper terms and conditions of service and a decent salary when they enter the teaching profession. This House should help towards the creation of attractive terms and conditions for the teachers who come into our schools.
At the age of 21 or 22, on a salary of £8,500 at the top of scale 1, and with very little chance of promotion, the job of a teacher is not a very attractive proposition. A scale 1 or 2 teacher today is earning the average wage, not of an accountant, lawyer or bank manager; his wages are on a par with those of a gas fitter, deck hands on ships, crane drivers and machine minders. In some cases, people in those other occupations are doing financially better than our teachers.
The top of the pay scale of a head teacher in a primary school is about £13,500. That teacher can be responsible

for upwards of 300 primary schoolchildren between the ages of five and 11. The pay scale is in no way commensurate with the responsibility that a head teacher carries.
In secondary education, £22,500 is the maximum for head teachers with 2,000 pupils, including fairly large sixth forms. Their pay is not commensurate with that of industrial managers, senior officers in the Army and senior officials in local government and central government. Today on page 3 The Timespointed out that, over the past ten years, the wage levels of head teachers in secondary schools have been severely eroded compared with those other posts. Local education authorities have reduced staff levels as schools have shrunk.
Morale is at an all-time record low. What can we do to deal with this? The symptoms have been the annual pay round and the inevitable arguments about pay levels, followed by industrial action and arbitration. I doubt whether many hon. Members agree with the teachers' industrial action. I reject it. There can be no forgiveness for those teachers who put children's education in danger. Many of us understand the frustration that leads teachers to take industrial action, but, if the teaching profession is to prove its dedication and professionalism, it will not be done by acting in this way. I and many of my colleagues have pointed out to teachers that, if they want to improve their terms and conditions, by acting in this way they are not impressing those whom they need to influence—the parents, Members of Parliament and the Government. They are going down the wrong road.
We must see an end to the annual pay round and the disputes cycle. In an early-day motion I and my hon. Friend the Member for Cambridge (Mr. Rhodes James) urged all parties in the dispute to negotiate in a spirit of goodwill for a long-term solution.
Some of those who represent the teachers at high levels, especially in certain unions, do not negotiate in a spirit of good will. This has been shown by offers by my right hon. Friend the Secretary of State for Education and Science to meet the union leaders. They refused to negotiate over the 1986–87 pay settlement, even though in October we shall be finalising the rate support grant for that financial year. Many Conservative Members must suspect that the leaders of certain trade unions, in the interests perhaps of the main Opposition party, are using the dispute to discredit the Government. They are interested, not in the profession as a whole, but in making political points. Perhaps Mr. Jarvis and some of the leaders of the NUT at national level have been reading Trotsky carefully and taking to heart his advice that demands should be made on the capitalist system which it is known it cannot meet. Teachers would do well to look at the motives of some of the union leadership.
I and the majority of my colleagues do not believe that the teaching profession is full of Left-wing activists. Teachers as a whole are eminently sensible people who realise the position that they are in. They want to settle the matter. We should be giving them the opportunity to do so. We should be talking about teachers in the way that my right hon. and learned Friend the Home Secretary and other Ministers talks about the police and the way that my right hon. Friend the Secretary of State for Social Services talks about nurses, to emphasise the value of the teaching profession to the nation and to make it clear that we support that attitude and value them as a section of the community.
It is important for Conservative Members and the Government to make teachers realise that we care about their future and the future of education. It may be worth mentioning that the Opposition Benches are empty, and that the 32 Labour Members who are members of the National Union of Teachers are conspicuous by their absence, together with alliance Members, who have constantly wooed teachers. Where are they tonight? Not one is present.
In future we must look for a long-term solution. We must see an end to the annual pay round and its associated disputes because not only teachers and parents, but everyone, is fed up with it, and want it ended. To end it, our approach to the problem must be realistic. Teachers must realise that although they have a great deal of support and sympathy for their case in the House, the dispute must be settled in a climate of economic reality. They must realise that states are like individuals in that there are cash limits on what they can afford.
I advocate that any settlement must include the assessment of teachers' performance. I appreciate that that is disputed, but from my conversations with teachers I know that they are not afraid of assessment. They say, "We are good teachers. We are not afraid of it." It will give excellent teachers an opportunity to shine, and it will resolve the problems relating to out-of-school activities, school lunch hour supervision periods, and the other parts of a teacher's daily life.
We should consider restructuring the pay scales. The teaching profession must recognise that unless we attract mathematic and science graduates and computer scientists into the profession we shall not be able to create the technologists and scientists of the future, who will be important to the development of Britain. We shall not attract them to teaching unless they are paid adequate wage levels, commensurate with industry. Clearly, British Telecom, Plessey and the big corporations can exceed some of the salaries at present offered to young scale 1 and 2 teachers.
A complete restructuring is required. To return to Houghton in 1974 is a waste of time, because too much water has passed under the bridge since then. We must regard the appropriate levels of remuneration on the Clegg review of 1981 as a base from which to work. If we are to give teachers' pay increases we should consider a long-term pay settlement, for example, spread over three years, including assessment and conditions of employment. We should guarantee them an inflation 13Acc-proof rise over and above an equalisation rise to represent the erosion in their pay levels, which has clearly occurred between 1981 and 1984. We could begin to achieve that by repealing the Remuneration of Teachers Act 1965, which set up the Burnham and CLEA/ST committees. It is a nonsense to negotiate on pay in one committee and on terms and conditions in another. We should merge the two committees. In 1981, my right hon. and learned Friend the Member for Warrington, South (Mr. Carlisle), who was then Secretary of State for Education and Science, told the House that it was the Government's intention to amend he Remuneration of Teachers Act 1965 to bring pay and conditions of service within the scope of
a single negotiating body.
That is sound sense, but there are still two committees. Instead of discussing pay in one committee and conditions of service in another, they should be discussed together.
If we repeal that Act, there may be an alteration in the union representation on the newly constituted body, which will truly reflect the membership of the unions in the teaching profession. They have changed greatly, especially recently. Many teachers have left the large unions and joined smaller ones because they will not go on strike. In west Lancashire, teachers undertook some industrial action at the beginning, but they have now rejected it. They have been reasonable in all discussions about this matter, and they have consistently declared their desire to talk to the Government and move towards a long-term solution wherever possible. The spirit of west Lancashire teachers should prevail throughout the country.
A settlement of the long-term problems must include assessment of teachers and—I am sure the general public would welcome—this-a no-strike agreement, so that parents can guarantee their children's teaching.
As matters stand, there will be no resolution of the problem. I urge my hon. Fiend the Under-Secretary of State to do everything that lie can to give the teachers a reasonable working wage and to undertake the restructuring of their contracts. I am aware of the Department's desire to settle the matter. Perhaps my hon. Friend can persuade the Department to reach a settlement. which can be put to the Cabinet, so that resources can be made available for the future and so that there is an end to the constant rounds of negotiations.
I await with interest the views of my hon. Friend the Minister, who should be aware that I speak not only for myself but for many Conservative Members who believe that we should put this problem behind us. The only way in which we can run our education system is to have vision and ideals as to the direction in which it should go. The moment we lose sight of our ideals, we shall lose our way. Let us develop the best education system that we can obtain. The best way to start doing that is to solve the teachers' pay dispute on a long-term basis.

Mr. Robert Rhodes James: I thank my hon. Friend the Member for Lancashire, West (Mr. Hind) on behalf of the House for having introduced this subject on the Adjournment. I should like to say how much I agree with him.
We are faced with a difficult situation, with which my hon. Friend has dealt fairly and responsibly, in which we accept the particular difficulties of the Government. I urge that our concentration should be on the problems of those teachers on scales 1 and 2. We need a new deal for the profession. Can we not forget the problems of the past, the difficulties we had with the teaching unions, and look for a moment to the future and try to build a teaching profession which will be worthy of the children and their parents for the future of the nation? Surely there are answers to the questions posed by my hon. Friend.
I am sure that my hon. Friend the Parliamentary Under—Secretary of State for Education and Science will respond to the questions. It is a question not simply of resources, but of will, and whether it is our desire that we have a teaching profession which is worthy of the children and parents of this country and are prepared to provide the means to do that. That is the question for the House tonight.

The Parliamentary Under-Secretary of State for Education and Science (Mr. Bob Dunn): I thank my hon. Friend the Member for Lancashire, West (Mr. Hind) for raising this subject and acknowledge the support given to his views by my hon. Friend the Member for Cambridge (Mr. Rhodes James).
The debate is on an important matter which is of concern to all of us in the House and, indeed, to parents, children, and other members of the public throughout the country. The teachers' industrial action has disrupted our schools for virtually the whole of the spring and summer terms, and that must be a matter of considerable anxiety to us all.
As the House will know, the unions' response to my right hon. Friend's constant encouragement to negotiate reforms which would benefit education standards and the teachers themselves has been far from positive. First, they began to back-pedal in the talks which, until last summer, had appeared to be making progress. As I said, they broke off discussions last December, and have refused to resume them. More recently, they have refused even to address the Government's offer of additional resources next year if acceptable reforms can be agreed until they have achieved what they consider to be an acceptable settlement of their 1985 pay claim.
In saying that, I wish to emphasise at the same time that the Government and my right hon. Friend the Secretary of State do not undervalue teachers. They fully recognise both the importance of the job that they do and the skill and dedication with which the great majority perform their difficult task. They also recognise that career prospects for capable and effective teachers are much diminished. We firmly believe that the Government's offer of additional resources next year, subject to agreement on reforms, can provide the means both to achieve progress towards further improvement in the standard of education provided in schools, and to begin to meet the genuine concerns of

teachers about their pay prospects. I urge the unions not to squander another opportunity to achieve real and lasting improvements to their members' position.
My right hon. Friend has made it clear that further agreement in principle must be reached by October if more resources are to be made available next year. That is a genuine deadline, because at that point decisions have to be taken on the rate support grant settlement for 1986–87. Already nearly two months have passed since the Government's offer was made. Time is fast running out. This represents the only way forward to more money for teachers' pay. It is of paramount importance to the health of the education service that the unions face up to economic reality and begin to negotiate constructively and realistically on the basis of the Government's offer. I am sure that my hon. Friends the Members for Lancashire, West, for Cambridge and for Bury, North (Mr. Burt), who is also with us, support that view.
We must acknowledge that time is fast running out. If we are to progress in the light of the Government's offer, the unions must take advantage of the opportunity to make progress in a spirit of moderation and co-operation, which will be presented by the resumption of discussions in the Burnham committee tomorrow. I am sure that the House hopes that that opportunity will not be lost. Both sides know exactly where they stand. The Government's position has been made clear in the letters of 21 May, 2 July and 9 July. It would be the height of folly if either side were to delude itself into thinking that the Government could be persuaded to change their stance.
We are fully cognisant of the fears and anxieties of teachers who genuinely wish to make a full and effective career in teaching at a time of falling rolls and school closures. I listened with interest to, and shall bring to the attention of my right hon. Friend the Secretary of State, what my two hon. Friends have said in this important debate.

Question put and agreed to.

Adjourned accordingly at fifteen minutes to Two o' clock.